YouSaid · the spoken record

Ted Martell

lines on the record: 68
first: 2023-11-09
most recent: 2023-11-09
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“This relates to that advice, but happiness is not the result of achievement. I think achievement is just a milestone. I've had this really incredible trajectory in my life where I got to go to Princeton and I got to go to Columbia and I've started my own business and I've got a beautiful family with three little kids. I was always clawing my way through it trying to get there, trying to get to the next thing. And I think I've learned as I've gotten older that it's just as much about process and the people you're working with.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“The best advice I ever received was don't forget to enjoy. It was a long time ago. I was a teenager and I was laying in bed, going to sleep, and he came in my bedroom just to say goodnight and tell me that he loves me. And he asked me a few questions about school. I don't even remember the nature of that discussion. But as he was leaving, he said, Ted, don't forget to enjoy it. And I don't think I really understood what he meant by that at the moment, but I think he was referring to really about the process and enjoying the journey, enjoying the road as much as the destination.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Second one would be Dana Craver. Dana Craver runs a firm called Lancier. Lancier was our first institutional capital. They took a real bet on us that we could really institutionalize our investment processes. And they've been instrumental in helping us think about how we make portfolio investment decisions. All of that probabilistic underwriting that we do was driven by them pushing us. We used to really think about things in like three different scenarios that were disconnected and isolated. And we insisted for months that this was the right way to do it until we really started listening. And they've just been really instrumental in our growth.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, aside from my immediate family and my extended family through my wife's side, I'm very grateful to them. They've all been very helpful and supportive to me. I think the easy answer there is Dave. Dave is my 50-50 partner. We've built this company from the ground up together. That's not easy. That requires a lot of patience, a lot of open-mindedness, a willingness to think independently and create. Dave's ability to do those two things is absolutely incredible. I think we brought really diverse experiences to Maverick. And I think we respect each other and find benefit in those experiences. We learn every day and have, since we started this firm, for 14 years. And I think that's super exciting. And it's super fun. And I think Dave no doubt has had the most impact on my professional life and career as we've done this for the past 13 years.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Investment Pet Peeve is the inability to present an opportunity clearly. I think if you can't sum it up in a few sentences, it's probably not an interesting opportunity. I think it's a skill that can be learned. We work really hard with our analysts to do that, to crystallize their thoughts. But when it takes five minutes to understand what you're even talking about, it really drives me crazy.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of my pet peeves is people who don't put the grocery cart away at the shopping center. It really bothers me. I understand why it happens. You've been shopping, you're tired, maybe you have kids with you. You have to go home and put the food away. It's exhausting. But I think if we all just put the shopping cart away, the world's a better place. I mean that literally and metaphorically. So put the shopping cart away.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I played the bassoon, the saxophone, and the piano, the saxophone and the piano are less exciting to people than the bassoon, the bassoon being more of an odd or unknown instrument. Interesting fact around me playing the bassoon as I met my wife in college, we actually both play the bassoon as children.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“It works. I can ride to the train station. It's really eye-turning when you see someone on a vintage vehicle ride off in silence. It's extremely fast, which it doesn't need to be. The whole idea of riding on a Vespa is not going fast.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I really love ambitious projects that solve problems and get my hands dirty. One example of what a project looks like to me is a few years ago I bought a 1963 Vespa to ride on my commute to the train station and it turned out to be a lemon. I don't know anything about small motors, cycles. On top of being a lemon, it was really loud and it exhausted a ton of smoke. That's not good for the environment. Noise isn't good for my neighbors early in the morning when I'm commuting to the train and I needed a solution. So I got the idea to convert it to being an all-electric vehicle and I figured it out. It took me about four months. I spent a lot of time in blogs and chat rooms and ordering books. This was no small challenge. It really combined for everything I loved, which is solving problems, designing solutions, and then actually executing on those solutions.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Making offers. We are getting some transactions done. It has been picking up. We also have an existing portfolio of loans and some REO where we've taken back the keys that we are seeking to sell. And we're seeing more transaction volume on that side as well.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Definitely billions of dollars. I believe this is the opportunity of our careers. And we're really excited about the opportunity set. I think there's more questions about when it will start to move, when transactions will start to happen again”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a little bit of hoping it all goes away. I think we don't think it all goes away. We think it has to be resolved. And so until banks and private lenders remark their positions until there is more pressure on them to clean up their balance sheets so that they can make new loans and do what their core business is, I think this bottleneck will continue.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“The bid-esque spread is really holding things up right now. You can see these loans building up on the balance sheets of the banks. We know that the loans generally are not trading, so when Maverick makes an offer, it's not that the other side is selling it to somebody else. They're holding it. And something needs to break. There needs to be some sort of catalyst that forces banks and private lenders to begin transacting. I think some of that is just a little more certainty in the market about what things are worth. Banks and private lenders need to remark their positions in order to do that. They need to go get appraisals. They need to have credit committee meetings. And they need to agree on where they should mark those positions. Then they can proceed to selling them. That takes a while. It's also painful work and it's not exactly what everybody wants to do right now.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think about a lot of really interest rate risks and how that will impact duration. I think there's so much uncertainty around what the Fed will do next, how long will rates remain high. Is this in fact the new normal and that money will actually cost something again? And how we think about that from an underwriting perspective is really important as we look at new opportunities. I think there's a natural desire just to assume that they'll go back to where they were and they'll stay low forever again. I think from an underwriting perspective, we really think about them staying up and staying up for a long time.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So naturally, with real estate values dropping, we have to remark our positions. We've taken some hits across our portfolio, I would say, for the existing funds those hits tend to be about two to three hundred basis points on returns, net returns to LPs. We're still generating a ten plus net return to our LPs.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very comfortable being patient. We have substantial dry power to put to work. We are not going to overpay for these loans just to put our capital out. We make our offers, we explain them to the sellers. They may agree or disagree. They may have different incentives as to whether or not they should actually sell. But we will wait until pricing hits a point that we think is appropriate to generate the returns that we're offering to our limited partners.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you graph out lending activity over the past twenty years, we've experienced an extremely precipitous drop since the start of the rate hikes. And we're over 50% below where we were before rates started getting hiked. And so the mark's really frozen. Nobody's lending capital. We've seen precipitate rate drops before only twice in the past 20 years. One was the global financial crisis and the other was the start of COVID. So these are two other periods of time where there's vast uncertainty in the real estate market. Obviously a real significant difference between today and those other two times is that rates were low and were dropped lower in those environments to encourage lending.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So there are always problems just because of the nature of the market, but specifically today, the opportunity set you're seeing is people that borrowed money at 3 or 4 percent over the past five to seven years who now need to refinance at seven to eight percent. And those loans are coming due. They're going to need to be refinanced. And these owners are either going to have to come up with fresh cash equity or they're going to have a problem on their hands. And I suspect there will be a combination of solutions to these problems. So I think the opportunities that we're seeing are people that don't have the liquidity or the ability to come up with additional cash.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“The vast majority is multifamily. It's about 60%, and that's pretty constant over the years since we've been doing the business. And I think there's two reasons for that. Number one, there's the most of it in New York. Most buildings are multifamily, especially in the middle market, which is the space in which we operate. The rest of it is split up between industrial. There is some hospitality and a little bit of retail, but not very much.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Do even with your family. Hopefully you like them. Hopefully, you enjoy what you do. And I think that's how people are. And I think that's how people are most productive”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really, that's affecting the office owners. We actually own no debt secured by office in New York City. We find valuing office to be extremely challenging today for the obvious demand reasons that you're asking me about. Anecdotally, what I can tell you is that every day I feel like more people are coming to the city. Dave and I ride the training together from Connecticut every day and every day it gets more and more difficult to find two seats next to each other. You feel it at lunchtime. You feel it continuously. It does feel like there is a rebound towards returning to office, returning to work. Friends of mine from where I live in the beginning said, never going back to work again. It's over. And then that shifted to one day a week. And now the conversations you hear are, I hope I can hold on to my Fridays. What we've found is that we like being together. We like to collaborate those two years of COVID while extremely productive for Maverick were extraordinarily lonely. You spend more time with your work colleagues than you.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's over a million properties in New York City, over a thousand lenders, currently over $600 billion of active debt secured by real estate in New York City. It is a huge market. It's also an incredibly liquid market.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd love to turn to this focus on New York City, certainly coming out of COVID, there have been big questions about what the commercial market will look like going forward. We'd love to hear your perspective on what's happening in the market.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have transacted with us for that reason. We've transacted with over 100 different lenders since we've started the business. And so if they want to overpay to win opportunities, they will do so. And in some cases, maybe they get lucky and win, and in others they won't. But we'll continue sticking to our standard of underwriting and analysis.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, our average transaction size is $7 million. That keeps a lot of the larger players out of our space. It's too complicated and too much work for them to get involved. They do show up once the deals start getting larger. I think that they don't have the systems and resources that we do to analyze these things to the same level. I think we saw after the global financial crisis the larger private equity fund managers who were investing in nonperforming loans left because there wasn't enough opportunity there for them anymore. We stayed and got better at it. They're returning. We're hearing about them looking at opportunities. There's also tourists in this space, people that haven't been there before, that don't understand what they're doing. And I think there's plenty of opportunity in the market for us. I think we're one of the most credible players in the market. I think lenders.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we've had some recent evolutions in how we're working using some of the gen AI on chat GPT or large language model type software. We're looking at a very large portfolio of loans, and we are able to build a large language model that actually ingests the loan documents and pulls terms from those loan documents, inputs them into a spreadsheet. It's able to do that at a rate that is superior to what a human can do and at a scale that no human could do. And so we see that as having tremendous opportunity for us as we go forward. Our data includes lots of documents that we've ingested from the city, from the state. These are documents that are publicly available and there is information inside them. The ability to analyze them on a broad basis for terms. For information, I think we'll generate substantial information edge for us.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a certain amount of time and effort that is necessary along with the right people to build a system like this. And I think we have real edge there. It's also not a system that is done. It's a system that we continue building always. It's constant evolution, constant change.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, our data is our most important competitive advantage. We've been building Maverick's data warehouse for over 10 years now. We've spent millions of dollars on it. It's been extremely difficult to build that system. And over the past few years, we've pivoted towards bringing it back in-house because we see it as the most important thing we do. And it's not just about cleaning and collecting data. It's about knowing what questions to ask the data. It's about domain expertise. It's about experience. Non performing loans that we have been involved in and been in the weeds in, whether we're down at the clerk's office actually printing out the files or identifying a new data point that's really important on a situation that we experience and reverse engineering it. You can't just spend money to build that.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Always get to a good rational decision. And I think that deadlock is actually tremendous benefit because it forces discussion and forces alignment.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, I think some of that's experience in time. We've been doing this for almost 14 years, and we've learned a lot about each other. But I think what we figured out is that by being transparent, by airing our differences as they come up and doing it out loud, we can really find resolution on disagreements. Many people worry about 50 partnerships when you have a deadlock. Well, if you have deadlock, you can't proceed. And so you need to figure out a way to solve that problem. And so in the early days, we would talk about it very calmly. You have to check your ego at the door. If we couldn't get there logically and find the right answer to the solution, we'd seek advice from others. That could come from our wives or other family members we would share that feedback. Over time it became LPs. We publicly air things that were not aligned on to the team all the time. And we value their feedback and input.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“A high base salary and their comp exceeds market comp, and they have the ability to invest in the funds as well as to receive carried interest based on what we award them. And that aligns our employees with not just David and I, but also with our LP. So that investment decision making is all aligned for everybody. For the employees, they also get unlimited vacation for what it's worth. But for all that, they have got to be great and we manage it through a 360 degree review process that we use here at Maverick, as well as the objectives and key results.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Partners and by other partners, I mean, our limited partners, I mean our employees, I mean our third party service providers. In effect, we're all in this together. And I think you have to think about alignment when you're thinking about partnership goals, when you think about the LPs, you have to think about the vehicles and the term of those funds, their long-term vehicles, their long-term relationships. The LPs have long-term causes that they want to fund. And so we approach our LPs in very much the way we approach our own partnership by being extremely transparent, being extremely direct with each other. We align our employees with our LPs as well through the way we compensate them. And I think it's pretty unique. A lot of firms in the real estate space have more of an eat what you kill structure. But we've decided we don't want to pay bonuses to employees at all. Instead, we pay them.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, when I think about partnership, I think about alignment. David and I are fifty fifty partners. We're extremely aligned. We have equal decision making. We have the same level of capital invested in all of our deals and vehicles. And I think that first five years in business, we learned a lot about what that really means. It was just Dave and I in a room trying to figure out what we're doing, trying to figure out how to do it better as we uncovered it. And it required a certain way of being, of being very transparent with each other, being very direct, providing feedback as to how we are doing. We knew very early on that we were committing towards a long-term relationship and we wanted our decisions to be aligned for the long term. And that's really how we thought about our partnership. But I think that partnership extends beyond just David and I to how we interact with our other partners.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Today, we are a team of 20 people. We're divided up into three different groups. There's data strategy. There's the investments team, which is managing the sourcing and the asset management of our deals. And then there's the finance team.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think we proceed full force to take back the keys, despite the fact that it's not an outcome that we want. When we think about the stick and litigation, we don't stop. We don't let up. It would be perceived as a weakness. It's important for us to push from that side hard. We think about any settlement discussions that are on the table from a very rational perspective and an analytical perspective determine, is this actually the economically best decision to take it back? And so it's really about making the decision if something's on the table as opposed to I don't really want to take this back.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“You think about as you're negotiating with an owner, you need to be able to have the stick of taking on that building. But at the same time, you ultimately would prefer not to for the reasons you just said.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, we don't actively seek to own the properties. If we end up owning the properties, there's really significant friction cost on the transaction due to transfer taxes at broker fees and carrying costs. And so we've found historically that you're better off settling with the borrower before it comes to that. We are willing to take back the keys. And we've done so about 10% of the time that we've made investments in nonperforming loans. And so we've taken back the keys about 20 buildings. We presently own about four properties. And we seek to sell them immediately through a broadly marketed process. Occasionally there are small things to do to those properties to clean them up, to maximize price, but we're generally not seeking to take on ownership or development risk. We don't find that that is the risk that our limited partners are looking for, and we don't think it's risk that's appropriate for us to take on. There's somebody out there that's better at doing that than others.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, when we think about it from an underwriting perspective, the short-term resolutions tend to be very high IRR, lowish multiple, whereas the longer-term or higher multiple lower IRR. And lower IRR tends to be that high single digits. And so we're really trying to stay in that first bucket. We want fast resolutions. And so we work very hard with our borrowers to find ways to exit quickly. We're very happy to get that higher IRR lowish multiple.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“A big difference between us and say a bank or even a private lender is that we're not in the business of lending. Banks and private lenders are in the business of lending and being good lenders and working with their borrowers. When they are selling us loans, it's kind of the last stop. The bank or private lender has decided to determine that relationship. When we've stepped in, we're not looking to make a relationship. We're looking to resolve a problem. I think Maverick has developed a reputation as being tough but fair in the marketplace. And I think borrowers many times will abuse that relationship with their banks.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Can be a difficult discussion, but these are commercial borrowers. These are borrowers who are using leverage as a tool to generate a return who have gotten a little bit over their skis. Most of them are rational players who understand the position they're in, who are willing to have a rational discussion and seek a quick resolution with us. So those conversations are fine. They're very clear. They're very direct. The rules of the road are laid out before everyone and everyone operates as they see fit.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“We use two means to encourage repayment by borrowers. Number one is to reach out to them and talk to them to try to understand what their perspective of their situation is and what their plan is to repay us. Number two is all of our remedies that are within the loan documents and exercising them. And we have found that over time that deploying both of these things at the same time is the most successful means towards facilitating a fast resolution. In other words, you're talking to them, but you're also enforcing your legal remedies.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Gap in the market. And so we've never been busier underwriting or looking at opportunities, but we are not closing a lot of transactions.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say it depends. There are many transactions that we do directly with banks and private lenders where there is no broker or middleman marketing the loan. So those I would say are not competitive. I would say that's the majority of the transactions we've closed where we have identified the distress. We've contacted the banker and we've bought the loan. That is more typical in a healthy market where it's a good loan, gone bad, meaning LTV is good and you can pay up to the principal balance of the loan. Today we're in a very distressed market. We have rising interest rates, inflationary pressures on expenses, decreasing cap rates, general uncertainty around valuation in certain asset classes, demand questions, and loans and their values are far more uncertain. And so what we've been experiencing in the market for the past 12 months and really even further than that going back to the beginning of interest rate hikes is a bid as well.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, our mandate is to deliver high teens net returns to our LPs. So we're underwriting the collateral and we're underwriting the loan documents. These are non-performing loans, so updated rent rolls, expenses, problems, things of that nature are not necessarily provided to the bank, so they can't necessarily give them to us. But we are looking at collateral valuation in a number of ways. We're looking at discounted cash flow analysis, comparable sales analysis, we're looking at old appraisals in the credit file, we're calling brokers and getting broker opinions of value, and we're using these different data points to triangulate to some sort of valuation on the underlying collateral. Once we get comfortable as to where we think from a conservative basis value is, that goes into our loan underwriting model. The loan underwriting model generates a series of probability weighted cash flows based on a series of qualitative and quantitative inputs into the model.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Due diligence includes reviewing the credit file, legal review internally and externally. We have legal staff on the team, ordering a fresh title report, collateral valuation, the credit or loan valuation, as well as a guarantor analysis, and ultimately a site visit before we close on the transaction.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our average loan size is $7 million. The majority of the loans that we're buying are $2 to $20 million, that middle market space. There's a tremendous amount of opportunity for us to play in it because it's complicated, because the material is complex, and because there's not a lot of other capital pursuing those opportunities, not in a systematic way the way we are at Maverick. Alone we're looking to buy is that the underlying collateral has cash flow, that it's in an extremely liquid property, meaning there's lots of demand for it, so it should be very financeable. I think those are primary on the collateral side. From the loan side, the lower the LTV, the better, because that encourages that fast payoff. If you think about the loans that we buy, a loan that is, say, 20% LTV has a lot more equity for a borrower to refinance the property and pay us off. Naturally, those aren't the ones that tend to be in default. It's the ones that are much closer towards that 70%.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our sourcing team is given lead lists that are generated by data strategy, and these lead lists are organized by these indicators of distress. And the sourcing team is going through these lead lists one at a time, making their phone calls doing their outreach and sourcing opportunities. They're calling banks, they're calling private lenders. Naturally, after doing 185 of these transactions, we've also built some relationships. Maverick has become the number one buyer of non-performing loans secured by real estate in New York City. And we get inbounds regularly. We have banks and private lenders calling us and asking us to tell them what we think about a given loan opportunity. What would we pay for it?”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“As you run through all these data sets and work through these screens, what is it that you look at when you come in on a Monday morning to say, oh, here are the potential opportunities we want to go try to source directly?”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Today we are ingesting many publicly available data sets. These data sets come in different forms and formats. They come from city, state, federal level, and we are first cleaning that data as we ingest it. And then we are connecting that data through similar fields. And so this process has yielded a very sophisticated data resource and team that can develop leads for our sourcing team. How we are doing.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maverick buys non performing loans secured by real estate in New York City. We make money by buying those loans at a discount to the underlying collateral value and then encouraging repayment from the borrowers. The profit is made up of any discount of the principal balance that we are able to negotiate with the lenders as well as the collection of accrued default and contract interest plus fees.”
2023-11-09 · Capital Allocators · Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349) · IDENTIFIED FROM THE TRANSCRIPT · source