Mike Comparato is Managing Director and Head of Real Estate at Benefit Street Partners, a credit-focused alternative asset management firm owned by Franklin Templeton. In this episode, we cover Mike’s views on the turmoil that the commercial real estate market is facing and the impending debt maturity wall that could set off a hurricane.
Overview of Podcast with Benefit Street Partners’ Mike Comparato
01:00 Our family has been in the real estate sector since 1946
04:00 There is a storm out there [in the CRE sector] and there is no question of its severity. It is just a question of when it is going to hit
05:00 Commercial real estate is a very credit and debt intensive asset class
05:30 The ‘debt maturity wall’ and its market impact
06:30 People are just not lending to hold liquidity
08:30 If you just waited in the past 40 years, thing just got better
09:45 “There is a lot of damage that is coming”
14:00 We are making equity-like returns in credit products. It is not often that you get to say that.
14:30 Multi-family real estate credit
16:30 The regional banks were the top credit providers for construction loans in the US
17:00 The banking space is in a much worse place than people think it is. It is very simple: if banks aren’t lending, then that means things are bad at the bank
19:30 The COVID-19 pandemic changed the demand for office forever. We are talking about a change that might not be recoverable
21:30 No one is making loans on office buildings right now.
23:00 Who knows how many young professional jobs, such as paralegals, will be replaced by AI
25:30 The data centre space is something that we have always avoided, because I’m always scared that we are going to wake up and someone has discovered a new technology that makes data centres completely obsolete. Whenever you have something in real estate that has a very specific use, it is very scary if it doesn’t have some kind of alternative use.
27:00 The retail apocalypse never happened. But why?
32:00 The number I would have to put on writing a loan for an office building would be so high that it basically means the asset is worthless
This podcast was sponsored by Franklin Templeton. As such, the sponsor may suggest topics for discussion, but the final control over the content remains with the Investment Innovation Institute [i3].
__________
[i3] Insights is the official educational bulletin of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe. The [i3] podcast is available on iTunes, Google Podcast, Spotify, Amazon Music, Stitcher or your favourite podcast platform.