Toby Cobb, Jonathan Roth and Justin Kennedy
Co-Founders and Managing Partners at 3650 REIT
Zero typically isn’t a figure that makes it onto a financial firm’s annual highlight. But for 3650 REIT, the fact that it saw zero defaults across its portfolio just underscores the high performance and hands-on approach the firm brought to 2021. Nobody else achieved that goal, according to Morgan Stanley’s Originator’s Score Card, with loans in default hitting an industry-wide high of 12 percent.
“COVID gave us a chance to test our plumbing,” said Jonathan Roth. “COVID provided that opportunity, and, not at all to make light of the suffering that came during the pandemic, but we were happy to take it.”
The nationwide alternative lender and special servicer notched $1.45 billion in originations last year, and made two preferred equity investments in portfolio transactions worth more than $1.2 billion to launch its preferred equity investment program.
Highlights included playing a key role as a sponsor and a retaining sponsor for the monster $1.23 billion loan on the Cambridge Crossing II life sciences complex in Cambridge, Mass., for a partnership of CalSTRS, New York State Teachers’ Retirement System, and Divco West, a prominent example of the institutional push in biotech. It also made preferred equity investments in portfolio transactions worth more than $1.2 billion spanning 33 assets, with an asset class-agnostic approach that was much more open to potential retail and office deals that others avoided, from malls in Reno, Nev., to office towers in Houston.
“Everybody else is outsourcing the servicing component,” said Toby Cobb. “We called every borrower in our portfolio and said don’t default, talk to us. So many borrowers wanted to default so they have somebody to talk to; that never happened here. Forty-eight percent of our existing pipeline is repeat borrowers.”—P.S.
