Paul Vanderslice
Head of CMBS at BMO Capital Markets
Where in the capital stack are you most comfortable playing today, and where are you finding the best lending opportunities?
Multifamily and industrial are still the preferred property types. The overall CMBS market, especially investment-grade securities, have recently underperformed key indices (CDX, CMBX etc.). Markets typically converge over time.
What’s your best piece of advice for borrowers seeking financing during turbulent times?
Don’t try to time rates or proceeds; take the loan as presented and approved by the lender. Market timing is a strategy that rarely works well within real estate lending markets, and no one catches the top nor the bottom of markets
Would you rather finance a well-established sponsor on a Class B office renovation in New York City, or the first-time developer of a multifamily project in the Sun Belt today? Discuss.
Any experienced borrower is key to any real estate lending decision, so I would opt for the Class B office renovation.
What’s your take on an impending recession? How bad might it get, and what are the silver linings (if any)?
The silver lining could include changes to energy and food prices and a possible lessening of worldwide uncertainties such as those surrounding Ukraine, Iran and Taiwan. The market needs good news before it rallies. I think recession is a definition only, takes two quarters to get into and at least two quarters to get out of.
When will we reach the bottom of the market, and when will we see a thawing in the debt markets?
I see best-case early 2023. New allocations for many financial institutions, potentially more stability, and less uncertainty regarding political direction
What would you do differently during the next pandemic?
Not panic and stay the course. Markets rallied during COVID, and lenders and investors on the sidelines missed very large opportunities. I’d also play more golf as my theory is a golf course is the safest place you can be.
What keeps you up at night, and what helps you sleep?
Nothing is worth losing sleep over. Markets stabilize over time. The duration of the stabilization is the only variable, but they always stabilize.
Lightning Round: Would you rather …
Refinance a Class B office property or be locked in a room for a month with Vladimir Putin?
Office.
Do a 30-day all-haggis diet or extend a suburban mall loan for three years?
A Scottish friend of mine has a Robert Burns night every year, so I’m more experienced at haggis than most. Therefore, suburban mall all day long.
Lend on the New York office sector, or take a job as a septic tank repairman?
New York office, but this was a tough call!
Traverse Jurassic Park on foot, or relive 2008?
Jurassic Park would be the less stressful alternative.
Babysit triple infants who just ate their weight in beans or finance Adam Neumann’s latest venture?
Adam Neumann.
Be paid in crypto or Nestle Crunch bars?
Crunch bars, as their market value is more ascertainable!
Be the British prime minister, or the person who has to announce interest rate hikes?
Rate hike person!
