Tony Fineman

Is it better to be a lender or borrower today? 

I love being a lender because we get to work with great brokers and borrowers on interesting deals, but today I would give the edge to the borrower. 

The market is flush with debt capital and lenders willing to invest that capital, but the equity market has generally not kept pace. While there appears to be available equity capital, it has often remained on the sideline and not invested at levels that match the market’s appetite for the capital. Although we have seen continued improvement over the last couple of years, the result is less investment sales and new development deals, and a disproportionate amount of refinancings than in a more typical market. 

That said, we have seen, and been able to execute on, great opportunities throughout the year and are optimistic the trend will continue.

Has the can been kicked fully down the road when it comes to loan extensions, or is there more leg action to come? 

Not fully. Over the last several years, a substantial number of lenders and borrowers extended and modified their loans while waiting for lower rates and less market volatility. Today, borrowers and lenders are more willing to transact at market levels, and more deals are coming to market at a reset basis. 

There are, however, situations that need more time to reach some kind of resolution, and the recent rise in interest rates has tempered some of the momentum in that regard. On the positive front, the patience that the market has shown has generally produced better outcomes for all parties involved.

Which property sector is most attractive from a lending perspective today, and which are you most cautious about? 

In all market environments, we are thoughtful investors and cautiously optimistic with respect to all property sectors and markets and approach each investment opportunity with a unique perspective tailored to the specific deal. 

That said, the most attractive sectors are those in which new supply was/is minimal or has been largely absorbed and bases have been reset. We have identified and closed on a number of high-quality office, retail and other transactions over the last several months that meet these criteria. 

Multifamily is a sector where more caution is warranted. Multifamily properties in certain markets are facing cash flow pressures for a number of reasons including higher than anticipated interest rates (putting a strain on cash flows and upward pressure on cap rates), significant supply that needs to be absorbed, and flat or declining rents (although we have seen some bottoming of rents and are even starting to see some growth in certain markets). While we remain cautious on the multifamily sector, we are willing to and have been able to make investments at good bases that we believe represent compelling risk-adjusted returns.

What’s your competitive edge in deals today, and who are you competing against most often (banks or non-banks)? 

Our strong broker and borrower relationships, and proven ability to execute on their behalf, have always been our primary competitive edge. Our origination team works across five offices, local to our brokers, borrowers and the real estate. Our in-house asset management team means that our borrowers deal with ACORE and never a third party, for the life of their loans. With respect to competition, we compete against non-banks and banks. 

When we compete with banks, it’s often because they are pursuing the whole loan with the plan to sell off the bottom part of the capital stack. More often, banks now finance non-bank lenders through warehouse facilities instead of originating directly.

Do you expect more or fewer loan sales in the year ahead?

We expect more loan sales for several reasons. 

Lenders are more willing to sell. Some borrowers are no longer supporting distressed properties, and many lenders are unwilling to take on those obligations. The bid/ask gap between sellers and buyers has narrowed to the point where pricing is tolerable. Some lenders have the wherewithal to take back properties and the patience to wait for a better market. Many others will need to clean up their balance sheets and move on from troubled assets.

Is AI indeed going to kill us all? 

I don’t think AI is going to kill us, but, if that is the ultimate outcome, we have a long way to go before we are met with that fate. 

That said, AI is having and will continue to have an increasingly disruptive, but, I believe, primarily positive impact on how we operate. The technology that is available today can partially or fully take on many administrative and/or repetitive tasks that are currently performed by people. We see that as a benefit. It will make our employees better and more efficient, and allow us to accomplish much more with our team. 

What it won’t replace is judgment and relationships, and ability to get deals done.

If you were marooned on a desert island, which three items would you bring, and what would be your key survival skill? 

A knife, a satellite phone, and the 12 most recent print versions of Commercial Observer.

Lightning Round:

“Traitors” or “Alone”? “Landman.”

If you’d attended Taylor Swift’s wedding, what gift would you have given the happy couple? Matching Jason Kelce Eagles Super Bowl LIX Jerseys — Go, Birds!!

Super Bowl or World Cup? Super Bowl.

Orcas or yachts? Orcas.

If you could train AI to do one new thing, what would it be? While I was thinking about an answer, AI trained itself to do everything.

Best vacation you ever took? Our kids’ bar/bat mitzvah family trip to Israel.

Conversions: “Keep `em comin’ ” or “Sooo 2020 (scoff)”? Keep `em comin’.

Sun Belt multifamily or Boston life sciences? Sun Belt multifamily (selectively).

Friend, marry, kill: Office, multifamily, data centers All friends (some select deals are worthy of marriage).

Book reader or phone scroller/email checker before bed? Phone reader.

Describe your portfolio in one word? Awesome. 

Fitness activity of choice? Hitting a heavy bag.

“Power” song you listen to when mentally preparing for a big event/deal/day? “Eye of the Tiger.”