March 03, 2021
France Media reached out to leading direct lenders from across the region to gain their perspectives on the challenges and opportunities in the year ahead, factors most affecting the lending environment, plus the property sectors to watch for 2021.
Executive Managing Director, Eastern U.S., Trez Capital
What is the biggest challenge you anticipate in 2021 as a direct lender or financial intermediary in commercial real estate?
In 2021, the biggest challenge may come from an influx of capital, largely from “new” entrants into the bridge lending space. Many of the new entrants propose higher leverage, and lower rates and ultimately do not fulfill their end of the bargain, and as such, borrowers are disappointed, and/or lose an opportunity. For nearly 25 years Trez Capital has been unsurpassed in the business at managing risk because our rigorous due diligence process protects both our investors and borrowers.
Where do you see the biggest business opportunity in commercial real estate for your company in 2021?
Trez Capital remains bullish about its construction lending business, i.e. stretch first mortgages, higher leverage and non-recourse loans largely in the residential asset classes. Many of the stronger borrowers with whom we are doing business, want to keep their relationship bank involved in their financing needs. This will create more opportunities for Trez Capital to allocate its investor funds, while not taking an outsized risk position, given the lower leverage the commercial banks are lending. We feel good about being able to deliver higher returns to our investors without taking additional risk, which is paramount at Trez Capital.
In what way(s) has the COVID-19 pandemic affected your company’s day-to-day operations?
Strangely, in some ways, it has made Trez Capital’s 140 employees stronger and more communicative. When all of our offices went remote, our technology was robust and resilient, our partners quickly began convening daily and weekly with the various teams to ensure seamless communications. We learned a lot about the various functions of the business and where we each needed help. This resulted in great communications virtually, and Trez Capital saw growth during the pandemic. We are stronger for it today than anyone could have imagined.
What property sector(s) is your company most bullish on in 2021 and why?
Trez Capital is optimistic about the residential sector in the higher demographic trending areas: southeast, Florida, Texas and southwest. We always opt for the lower risk alternatives, including rental units (multifamily and single-family) and for sale residential. We are seeing opportunities to conservatively finance best-in-class borrowers on strong assets. It helps to be nimble, as Trez Capital is.