Tim Johnson
Global Head of Blackstone Real Estate Debt Strategies at Blackstone
What are the key lending opportunities you see as we round out 2021?
I think in today’s environment, it’s clear what asset classes and strategies are performing well, and there is a large amount of lender enthusiasm for those asset classes, including from us. Strong fundamentals underpin both equity and debt opportunities in sectors such as warehouses, multifamily and life sciences, and we expect to continue to deploy capital in those spaces. There is also more opportunistic lending to be done in places that have seen temporary disruptions but have good long-term fundamentals such as urban apartments and high-quality, new-build office. A prime example of this was a $1.3 billion loan that we helped finance for Terminal Warehouse, which will consist of modernized office and retail space in West Chelsea in New York City.
Pick your poison (and tell us why you’d drink it): retail or hospitality?
You can’t paint a broad brush on either asset class, and we have found strategic investments in both during the pandemic. We have been a bit more active in hospitality given we believe that global travel will continue to rebound and grow. As a lender, having durable cash flow that you find in certain types of necessity-based retail is a good thing, and we’ll take as many of those opportunities as we can find.
Where are you seeing the most competition for deals today? What’s the greatest weapon in your bidding arsenal?
The market is pretty healthy in terms of competition. There are good options out there for borrowers both in terms of balance-sheet debt and securitized debt. Where we have been historically able to differentiate our approach is providing a unique combination of thoughtful investing and great client service. We have exceptional teams on the originations and asset management sides and our borrowers tend to come back to us because of that. We can think like the equity on both the front and back end of a deal, and that is valuable to our borrowers. Our asset management team is a big part of why we’ve been able to develop so many repeat clients.
New York City: “I want to be a part of it”?
I want to be a part of it, even if I am a Boston sports fan. Cities like New York have and will continue to foster incredible opportunities and will attract high-quality and diverse talent. There is nothing else like it in the world and no place has the resiliency of New York. At the end of the day, it comes down to talent and innovation and New York is a leader in both categories.
What’s your favorite secondary market and why?
As we’ve expanded our business, we’re doing much more in growth markets. Historically, we have focused more on gateway markets and that was a function of looking for places where we could find a combination of scale and strong fundamentals. Now, with products like our fixed-rate insurance capital, we’re able to be more active in smaller markets where the growth fundamentals are strong. There’s not just one market that I like the best, but Salt Lake City stands out a bit for me. It is growing a diversified economy, and it has a good quality of life and cost of living. Plus, I personally love the mountains.
Are you adding life sciences deals to your loan portfolio? Why or why not?
Life sciences is an area of high conviction across Blackstone (BX), and particularly in real estate. We believe the right assets in the right locations will continue to do well in this area.
How prominent do you envision C-PACE financing becoming? Is it here to stay?
As an investor, I think it offers great relative value to be the C-PACE provider. It provides a senior position with good return. It still needs to develop to become a less costly source for borrowers to accept it, and there is still a long way to go before there is broad lender adoption. Overall, it’s great to have tools to provide the much-needed capital to reduce the impact buildings have on the environment. I’m hopeful there will be broader adoption of it as this market matures.
Lightning Round
Stabilized or transitional assets?
Transitional; I like lending at a lower basis where much of the downside is already known and factored in.
First work trip post-COVID?
I recently did my first international trip to London.
Fast-food guilty pleasure?
Does Dunkin’ Donuts count?
“Ted Lasso” or “The Morning Show”?
“Ted Lasso”— it brightened my days during COVID.
Peloton bike or outdoor cycling?
Neither, yoga.
Last book you read?
“A Gentleman in Moscow,” by Amor Towles.
“If I hadn’t pursued a lending career I’d be …”
A teacher.
