January 18, 2023 • 48 mins
The story highlights the speaker's experience as a teenager working at a phone repair kiosk, where customers would frequently ask if he could fix their broken screens. The speaker then taught himself how to fix screens and began selling them at a profit, eventually sourcing them in bulk from Alibaba to lower the cost. The story also touches on the theme of listening to customer needs and responding to them in order to create a profitable business.
00:01 Introduction to this episode.
07:13 Selling screen protectors.
13:01 Being data-driven and sharing information.
15:00 Transparency creates value for both sides.
18:58 Lessons learned from John’s pitch.
25:50 The importance of having committed clients.
31:21 Comparison of debt service on a deal by deal basis.
36:45 Risk of taking a gamble.
40:38 Long term maturities and extensions.
lenders, market, people, loan, client, equity, selling, deals, screen protectors, year, calls, rates, business, borrower, easy, long, sales, chase, interest rates, debt
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Mordecai Rosenberg (00:01):
Hey, it's Morty. Welcome back to the
Origination podcast, where wespeak to the top salespeople in
the multifamily industry to tryto understand what separates the
top performers from the rest ofthe pack. On this episode, I'll
be speaking with Chase Johnson,Managing Director at Cushman and
Wakefield and Greystone. We knowsales is not easy, but is it
(00:26):
always complicated? Chaselearned very early in his life,
that sometimes it's just assimple as listening to the
customer, listening to what theywant, and then delivering that
and doing what you say. This isjust one piece of so many great
nuggets of advice that you'llhear on this episode. I'm sure
you'll enjoy it as much as Idid. So without further ado,
(00:49):
let's speak with Chase.
Chase Johnson. It's a delight tohave you on the origination
podcast. Welcome to the show.
Chase Johnson (00:59):
Thanks a lot more than happy to be here.
Mordecai Rosenberg (01:02):
Awesome.
Chase, you know, we got to spendsome time around the holidays in
New York, any kind of memorableimpressions that you have from,
you know, being around townduring that holiday season? This
year, anything surprised with
Chase Johnson (01:15):
You know, it was great. It was exactly how New
York should be during Christmastime. You know, we got to walk
around. And I think we went to,me and my analysts, we went to
Rockefeller Center and took aselfie in front of the front of
the tree. And it was, it was adefinitely a good fun
experience. And it was awesometo see Greystone and meet
(01:38):
everyone. So it was a greattime.
Mordecai Rosenberg (01:40):
You came at exactly the right time, because
everyone's in a good mood, youknow, Thanksgiving when you have
a holidays. Then about, Well,exactly. January 2, straight
through March 1, everyone goesinto a state of depression as
it's just cold.
Chase Johnson (01:53):
And, you know, not too much fun, is like I was
telling someone earlier, youknow, I'm here in Austin, Texas,
and you know, I was tellingsomeone earlier, so like, you
know, the cold weather is greatup until December 25. And then
I'm gonna be done with it. Yeah.
You know, after the holidays,I'm not much of a cold. Yeah.
booziest.
Mordecai Rosenberg (02:14):
Alright, well, Chase, why don't we start
out with the the question thatthat I usually start with, which
is, you know, if you think aboutearliest sales experience, you
had the first memory of failingsomething, and it could be when
you were little, it could behigh school, college after
college, but anything could cometo mind.
Chase Johnson (02:32):
Yeah, absolutely.
So, you know, my first salesexperience, probably working in,
in Baybrook mall in, in SouthHouston area. And so, you know,
whenever I was 16 years old, mymom was, my parents were nice
enough to give me a vehicle to,to drive around. And so I was
(02:54):
super excited about that. Butthey were saying, hey, look, you
got to pay for your, your gas.
And so you gotta go find a job.
I went to the mall, and I foundthis place, there was a kiosk in
the mall. That's funny. Theythey did it was called invisible
shield, they did iPhone screenrepair. And they did like screen
protectors. So like, it wouldbe, you know, a just a screen
(03:17):
protector that goes on yourphone. And in so, you know, I
saw the guy sitting there, I waslike, man that looks like kind
of like a easy job. You know,you just put screen protectors
on people's phones and sit inthe middle of all and people
watch. And so I went up to him,and he got the job. And, you
know, did my little training orwhatever, on how to apply the
(03:39):
screen protector, and it was nottoo difficult. And then, you
know, as I was working there,people would come up to me, and
they would say, hey, you know,can you fix my lunch? And so I
was saying, hey, no, we can't dothat. We just put the screen
protectors on the phone so thatyour phone doesn't crack when
(04:01):
you drop it next time. So you'regonna have to go to Apple, and
you know, get the screenrepaired and then bring it back
to me and I'll put the screenprotector on. And so after about
like 1015 20 times of peoplecoming up to me and asking me
the same question they were Iguess the marketing of that
kiosk was a little off you know,people were thinking hey, you
(04:24):
know, you can repair phonescreens. And so you know, I kept
saying no and then one day myphone I dropped my phone on the
ground and I don't know if I hadan invisible shield on it or
not. But but the screen didcrack. And so I went on YouTube
and I learned how to repair thephone screen you buy like a
(04:45):
glass online and it comes inyour house and there's a little
screwdriver and little screws orwhatever but it was real easy.
Back in the day. It was with theI remember vividly it was like
the iPhone three jeans or outthey had a black back and it
washer, it was like the coolestthing. And so the thing he did,
it was the easiest thing we didwas two screws at the bottom.
(05:06):
And then you get a littlesuction cup. And it brings it
up, there's like three littlethings, you know, electronic
components that connect to themain motherboard or whatever.
But I had no electronicsbackground back then. But I was
too broke, to go to apple andpay, I was like, I can save 50
bucks if I display the screenonline and do it myself. So I
(05:27):
did it successfully on my ownphone. And I was, you know,
going back into work, andsomeone asked me, Hey, can you
do you know, my screen gotcracked and repaired? And I'm
like, yeah, we can repair it.
And so that's kind of the first,you know, time where I felt
(05:48):
like, you know, at least from anentrepreneurial type of
perspective, that, you know,yeah, I can really make money
selling something. And that, youknow, there is an identified
need. And I'm, I think I'm ableto fill it in. So I went on in,
you could go to whateverwebsite, what are the screens, I
(06:08):
ordered, like two or threescreens. So out of those really
quickly, that did a couple timesfrom kind of a retail
perspective. And then I decided,you know, these screens are like
40 bucks and selling for $100.
So I'm making like, $60 profiton each screen, because I was
really good. But I went to thisthing, I guess Alibaba was
(06:29):
really early on at that time,with Alibaba, and I were like,
minimum order, if you want to.
Crack was like, I don't know,like, one of experience. And I
was like, Maybe I'm not going togo on 100. But I talked to him
on the web on the website, and Iwas like, just send me 25. And
(06:51):
so I got 25. Like, I startedgetting the bulk orders. And I
got the price down to like, fiveor 10 bucks and screen. Selling
for $100. I thought I was justlike a genius. And so you know,
that's, that's really the firstmemorable experience of of
selling that I've had, you know,that kind of age and about 16
years old.
Mordecai Rosenberg (07:13):
That that's awesome. It makes me feel
nauseous for all of the $100fees. I paid for to fix screens.
Oh, yeah. For you know, my phoneor my kids, like, you know,
iPads and phones. It's I mean,it's amazing what they charge
for. Yeah. I mean, if you don'tknow, yeah, it's kind of like a
(07:33):
black box. It's like I'mintimidated. I'm scared, I can't
do this on my own. And I need aprofessional to do it, or some
guts that has done it before. Sothat's an awesome sales story.
It's also interesting that thatwhat you were doing was just
listening. You're you're sellingyou're, you're they're selling
these screen protectors, you'reselling some of those, right,
(07:56):
but you're hearing thisrecurring need for, you know,
actually, what I really want is,is if you could help me fix my
broken screen, because that'sthis urgent thing that I have.
Can you help me with that?
Right? And in all you did wasyou responded to? Well, first of
all, you just you listened tothe customer, and you heard what
they had to say. Right? And thenyou responded and said, alright,
(08:17):
well, maybe there's something Ican do to to fix that, that that
problem? I feel like in youknow, in, in our industry, let's
say in multifamily finance, it'sprobably not uncommon for people
to just say like, well, let'ssay I sell Fannie Mae loans.
It's like, alright, well, youwant a Fannie Mae loan? No, I
don't want to offend anyone.
What I really would like is actslike, I'm sorry. We don't we
(08:41):
don't do that. Right. So you canhave that approach. Or you can
say, well, after you hear enoughtimes that there's a particular
need for something else, you cantry to find a source for that. I
wonder if that brings upanything for you as far as your
approach? Yeah. In your currentrole in capital markets, and in
(09:05):
commercial real estate, the roleof listening, any examples that
come to mind about that kind oflike, just really like listening
and trying to understand like tonew direction?
Chase Johnson (09:17):
Yeah, absolutely.
I mean, I think that, you know,just recently, you know, we've
seen kind of, you know,obviously a bunch of volatility
in the, in the financialmarkets, whether it's on the
debt side, or the equity side,over the last, you know, I don't
know, five plus years that theequity JV equity was easy to
come by, right. So if you were asponsor that had a few good
(09:37):
fullcycle deals under your belt,you had no problem raising your
LP equity. And whether that wasfrom friends and family or
whether it was from aninstitutional type of investor,
you really didn't have troubleas long as you were a good, good
operate. Right? And, you know,obviously those that struggled
in the equity space back thenwere Probably someone Little
(09:59):
Reader opinions versus secondproject, whatever it is, those
type of assignments wereprevalent back then. But now
today, we can see that the LPequity markets have really,
really tightened up. And we'veseen, you know, a lot of those
types of requests come throughwith strong operators, right. So
you've got, you know, operatorsthat have been in business for
(10:23):
20 plus years, that have gonefull cycle on dozens and dozens,
if not more projects, andthey're, you know, coming to us
now saying, hey, I need equityended up, my guys are on the
sidelines are pencils down. And,and that's something that, you
know, it's not easy to go findin this market, you know, LP,
equity money, there's no nothingworth anything of substantial
(10:46):
amount is easy. And so weunderstand that. But there is a
shift in that mean, it seemslike recently in, you know, JV
equity introductions. And sowe've kind of, on a selective
basis, taking those assignmentson with strong sponsors, what
we're seeing is that, you know,this gets you in the door with
(11:06):
an operator, a developer, orwhoever that otherwise would
have not really had a need foryou in a really shiny market.
And so that is a leader intocapturing their debt business as
well. So if we're doing theequity, we want to do that. And
that's an easy trade there. Andso it really does open the
(11:27):
conversation up, if you can kindof widen your approach from you
know, hey, this is this is theonly product that I sell, if you
can kind of widen that out andsay, Hey, what do people need
right now, and really dial it inand go find that? Yeah, and that
requires conversation. I mean,it's probably easy in let's say,
(11:48):
a market, that's very slow tosay, alright, I'm not going to
pick up the phone, because Ihave nothing that really offer
in this market. But it's youneed to stay in conversation in
order to keep your ears open tothe new needs that are emerging.
Absolutely. And, you know, we'redata driven. And so you know,
those conversations that we'rehaving, whether it's with a
(12:10):
lender, or with an equityprovider, you know, we keep it
very simple on the datacollection side, but we are
collecting data on what theirprograms look like, you know,
from you know, where they playin the stack. Are you a first
mortgage lender? Are youpreferred equity? Only? Are you
JV equity? You know, are youwilling to coach up with a green
sponsor, I mean, you know, allthose types of things, we're,
(12:32):
you're kind of tracking as we'rehaving conversations with
lenders, as well. And, you know,for us, if we do our work on the
front end, as we're having theseconversations, it's easy to
leverage the borrower, orsponsor comes to us, because
LinkedIn is go to our databasethat we've got, you know, always
updating our database and say,hey, look, this is the need, we
can filter out who we've talkedto recently that might want to
(12:55):
offer that product. That'sgreat.
Mordecai Rosenberg (13:01):
You've mentioned to me in the past, you
talked about being data driven,and just asking the right
questions and sharinginformation, we've talked in the
past about your approach withprospects and clients and banks,
as well about how everyone wantsto know what's going on in the
market, just us sharing yourknowledge and the data that
(13:23):
you're gathering, you know, tojust add value to, you know,
others that you're talking to,and to build, build those
relationships. When you thinkabout it, you know, during the
time that you know, I guess,quarter three, quarter four of
2022, we've got turbulence,we've got people that are
either, you know, a lot ofpeople are pencils down here to
the ground, trying to figure outwhat's going on, you know, I am
(13:45):
too. And so both on the borrowerside, and on the lender side, or
let's say, on the equity side,and the sponsor side, whatever
you want to say, you know, it'sfunny, I maybe send the joke to
you at dinner, it's like we had,we were talking to the
borrowers, they were askingwhere the rates were, and then
we're talking to the lenders,and they're asking where the
(14:05):
rates were. So it's like, no onereally knew, you know, in these
kind of volatile times,everyone's trying to gather
information. And well, I'vealways kind of made a
cornerstone of my kind ofbusiness philosophy is that I
want to be transparent witheverybody, you know, I'm going
to tell you how it is. And youknow, no matter what, if it's
(14:26):
the, you know, I'm going to tryto say, the best way possible,
but in and I think that lendersreally like that as we're going
out to market and a competitiveprocess, where we say, hey,
look, we've got these three tofour quotes on the table. And
this is the best one that we'releaning towards. And if you can
get there definitely we'd loveto throw your name into the
(14:46):
ring. But if you can't, I don'twant to waste your time and you
know, kind of be verytransparent on not only kind of
market intelligence on a generallevel, but also want to do a
specific level. And I think thatreally for
Chase Johnson (15:00):
adds value directly to the sponsor or the
borrower. In that case, whereyou're saying you're You really
are truly creating market andyou're not, you know, you're
you're creating transparencywith the lenders. That
opportunity.
Mordecai Rosenberg (15:12):
So to your point about borrowers want to
know where rates are and thelenders want to know where rates
are. The interesting thing isthat as you're having
conversations with both sides,you can answer that question for
both both sides. Right, you canyou can you're accumulating
those conversation points. Andin this market where there is
no, there isn't a lot oftransparency, not for any ill
(15:37):
intent. But just because thingsare moving so quickly. And it's
hard to know what what's goingon. Just, again, being in those
conversations, talking to peopleasking questions. And listening
now gives you more informationthat you can have in that next
conversation,
Chase Johnson (15:54):
exactly how it compounds on each other, for
sure. And you're able to kind ofpick up pieces from one
conversation to another andformulate your own opinion about
where the market is.
Mordecai Rosenberg (16:06):
Going back to your, let's say failed
history. Any particular salesrole models that you've had in
your career that you look to islike, wow, like you saw someone
who just, you know, a ring oflight around them when you saw
them clip closing deals, and anyjobs that just really inspired
you or taught you in thisindustry?
Chase Johnson (16:26):
Yeah, I mean, I think that, you know, what,
whether I would call it a salesroom, roll monitor model or not.
You know, one person that comesto mind for me is, is my boss
for the last eight years. So Iwas at this a little background
on me, I started out with acompany called Texas Realty
capital, we were a smallboutique commercial mortgage
(16:47):
banking platform that originatedlike, life insurance company
loans for about 20 differentlife companies. We originated in
service, those loans we sold,the owners of that company was
John Moran in June, they werelocal Boston guys had been here
forever. And then they ended upselling the, you know, their
business to North mark and April2019. And subsequently, in
(17:11):
September of, I guess, 2022 Imoved over to Greystone and in
Cushman Wakefield and so, youknow, John Moran really was my
mentor, as I got out of school.
And, you know, the, whether Iwould say that he was my sales
role model or not. But I wouldsay that, you know, he's
definitely my, my commercial,real estate, finance and also
(17:33):
character model. And I thinkthat that goes a long way, when
you're, you know, whatever, TonyRobinson or whatever, or
whoever, you know, these largekind of faces in the industry,
you know, they they have,there's, there's, you know, kind
of that hoo, rah type ofmentality, and then there's also
(17:54):
this kind of, Hey, be good to,you know, people in goodwill
follow up. And if youconsistently be good, and be
transparent with borrowers andlenders, and if you get the
right thing, even when it mightbe hard to do the right thing,
then everything's gonna workout. And so that's really kind
of the main thing that keytaught me, and then I think it
(18:16):
does go into sales, right? Imean, it's, you know, it's maybe
a little different than pickingup the phone and not not stop
calling until you hear a yes, orsomething like that. But I think
in our industry, that's notreally the way that it works. I
mean, you can't force somebodyinto these types of products
that we're selling, have longer,you know, close cycles, they've
(18:41):
got longer signup cycles,they've got, you know, it's a,
it's a long game. And so I thinkas long as you are doing the
right thing for, you know, yourcustomers, whether they're a
borrower or lender, then thenyou're going to be alright.
Mordecai Rosenberg (18:58):
Yeah. Do you remember in maybe in some of
your early meetings with John,you're anything that you learn
from how he presented to clientsor from pitches like anything,
you know, that that stands out?
As far as Yeah, his approach?
Chase Johnson (19:13):
You know, I think being curious about the math of
it, like being curious of how,how does, how does debt, you
know, we all we have debt yieldas a measure, well, why do we
measure dedicated, you know,what, why do we measure debt
service coverage? You know,really kind of getting into the
fundamental details and maybecoming up with, you know, I
(19:36):
think also explaining somethingthat might be a little more
complex to the left instead oflaying down in explaining that
in a simple form, really is, isI think the way to kind of that
you know, that you've maybemastered your craft is being
able to kind of explainsomething that was maybe
difficult, you know, to graspit. Maybe on your front end and
(20:01):
explain it to someone in a verysimple, simple way that makes a
lot of sense. And I don't knowif that answers your question,
but keeping keeping it simple.
Mordecai Rosenberg (20:10):
Yeah, yeah, my, my, my father, he likes to
say that if you can't explain itto a third or fourth grader,
then you probably don'tunderstand it. Right,
Chase Johnson (20:20):
exactly. And so I think that that goes a long way,
Mordecai Rosenberg (20:24):
just over the last 18 months, 24 months,
we've had kind of two ends ofthe bell curve in terms of the
market activity, right, you'vehad just a time where we never
seen more sales and REITs wereat record lows, capital was
available from you know, allcorners, than we have today,
(20:45):
where rates have increasedsubstantially, the market can
grind it to it to a halt. Verydifferent environment. I'm
curious, you've had lots ofdifferent clients, you probably
learn about your clients in goodtimes and in bad times. Yeah,
any kind of instinct that you'vehad about, you know, what makes
for a good client, or what kindof clients maybe you would want
(21:09):
to avoid? In, you know, in thefuture, you know, based on, you
know, your, what you've seen ingood times, and now in
challenging times, like insightsabout what the client profile,
you know, what could be theircharacter, their mindset, their
their anything else,
Chase Johnson (21:26):
I can give you two examples of maybe one kind
of in this was maybe more of aCOVID example than a, but it
still kind of goes into thetheme. We booked, I don't know
$250 million worth of commercialmortgages with a few different
life insurance companies with awith a client of ours that owns
(21:47):
enclosed malls around thecountry. So some of the hardest
product type defining some ofthe most disparage kind of got a
market, we successfully foundthe right lender. And then
COVID, loaded them up with abunch of a bunch of long term
fixed rate money, and COVID.
And, you know, I was shaking inmy boots, I'm like, Oh, my God,
(22:10):
because we had, you know, guysthat were owning whether they
were office buildings, or it wasless on the multifamily side,
but it was mainly office andretail that was kind of, you
know, we're getting calls off,you know, back to back, hey, I
need relief, I need help, I needflipping interest only or I just
need to defer my paymentsbecause tenants aren't paying
(22:31):
rent, I senators aren't open,you do really understand the
character and bad time. And thatclient followed me up in the
thick of it. Every single one ofhis malls were were forced to be
closed in the middle of it bythe municipalities because of
because, and he called me up andhe said, Hey, Jason, I just want
(22:53):
wanted to let you know, if youcould relay the message to the
lenders that we did deals with,I want you to let them know, I'm
intentionally not going torequest the dollar relief, I'm
going to pay my 15 year ends, asyou know, like super quick
amortizing loans that weoriginated. And I believe in
these properties, and we'regoing to be stronger on the way
(23:16):
out of this thing. And I justwant to let you know that we're
all good. And so that wassomething that really kind of
took me aback. And I think thatthat's something that into the
next cycle is going to propelthem even further. Right? So you
doing the right thing, in thebad times, is going to pay off
(23:36):
in the good dad's, I reallycommend him for his decision in
there. And I think he wasdefinitely trying to make a
point, if you didn't get one,and those lenders are still to
this day, love to do businesswith, you know, I don't know, if
they would have the samesentiment, and he had every
right to go and request interestonly or, you know, man just
(24:00):
moving from a 15 year to a 25year amortization for a few
months, you know, give him some,and they were saying they were
already, like, hoping not hopingbut they were already pretty
much understanding that they'regetting it from all angles, he's
probably going to be one ofthem. But he decided not to. And
I think that went a long way.
(24:21):
And then the second, you know,kind of opposite type of, you
know, encounter was we had, youknow, COVID hit, and we had a
borrower that, you know, whatwill you do? Because we serve as
a bunch of mortgages, what wewould do is we would we would
come through and we'd sayalright, send us a send us your
rent wall and let us know whichtenants are either paying rent
(24:43):
and not paying rent, give us astatus on each one of the
tenants and maybe even justconversation, you had to even
get some color about what'sgoing on right now. And so, we
had a sponsor come through, andwe did an office building with
them. And he said Nearly sixmonths after selling my office,
(25:04):
here's your rent roll, fill itout, and let us know the status
of each tenant. He says, All thetenants are paying rent. And,
you know, it's but everyone elseis getting six months, I want
six months. And I was like, Hey,man, you know, that's probably,
you know, not the rightapproach, we'll chase we got, we
(25:25):
need six months, go get, youknow, forcing my hand to request
this from the lender. And whoknows if that deteriorated the,
you know, sentiment with thatlender in particular, but
there's kind of two ways to goabout it. And I think that, you
know, the way that my mall guywent about, it was a pretty
commendable way. It probably wasthe, you know, not the best on
(25:46):
his pocketbook. But, you know, Ithink he's gonna be just fine.
Mordecai Rosenberg (25:50):
And you want clients, first of all, who are
committed to their property? Imean, there are, look, we're in
a money making business, right?
So people are, you're not buyingan asset, to not make money on
it. It that's the reality. Atthe same time, there are certain
clients who will do the leastthat they possibly can do, right
(26:11):
to fix a glaring problem, youknow, the, you know, you know,
they used to call it like,putting lipstick on a pig or
something like that, you know,that's a Texas phrase. Oh,
that's
Chase Johnson (26:26):
a phrase. Yeah, yeah.
Mordecai Rosenberg (26:28):
Yeah, I didn't hear much in, you know,
Keeper school growing up. Butthen there are others who are
really who have are committed tothe property and to the tenants
to those people are also, youknow, probably tend to be more
committed to their partners asfar as like just doing what they
can do, you know, to make a,because it's what a retail.
Chase Johnson (26:52):
I mean, there's a lot to be said about, you know,
obviously, your reputation. Andthe world of commercial real
estate is is small. I mean,it's, it's not this, it seems
large at some perspective, butwhen you get down to it, there's
so much crossover, and peopletalk and leave. There's these
large conferences like NMHC, andNBA. And I mean, you know, these
(27:17):
things happen, and people talkpretty quickly, and Word travels
quickly. And so, unfortunately,all your good deeds don't really
travel as quick as your baddeeds, right? Like, something
happens, where someone maybegets in a dispute with a
partnership, and there's somecontroversy that rolls around
the market very quickly. So youknow, avoiding that at all cost,
(27:41):
I think is definitely animportant key to being
successful in the industry. Andit kind of goes back to what we
originally said, it's like, justbe transparent. Do the right
thing. And everything should beokay. Work hard. Simple stuff.
Mordecai Rosenberg (27:58):
Yeah. Yeah.
One, one idea for you. Yeah, Ithink that the client who you
mentioned, who, you know, stayedwith, you know, said even in the
middle of COVID, they weregonna, you know, keep on keep on
paying. It would be you if youwent out to lunch or dinner with
them, and said, Look, I realizethat here's a really admired
what you did, I'd love to dobusiness with more people like
(28:20):
that. I mean, I'm committed tomy business, and I want to work
with people who are committed totheirs. Yeah. And is there
anyone else that you think comesto mind that you that kind of
shares your, your mindset thatyou think would make sense to
me, might be an interestingconversation, because first of
all, people like being seen andrecognized, you know, and that
was something that he did, thatperson did, because they thought
it was the right thing. Butpeople like to be recognized.
(28:43):
And, and to, you know, when yousay, Look, this is how I see
you, and they relate to thatpicture. It there's a resonance
that they that they feel, thatmight be a interesting way to
kind of expand the circle of,you know, committed client.
Right,
Chase Johnson (29:00):
like minded individuals, and individuals.
Yeah, absolutely. And, you know,people want it. Yeah, I mean,
people want to do business with,you know, who they they like and
who they trust. And, and, yeah,who's better endorser than, you
know, a person that you'd liketo trust?
Mordecai Rosenberg (29:17):
Right, exactly. I'm curious. And this
is for my own, I guess, marketresearch. You know, one of the
things that we're trying tofigure out is, you know, how can
you add value to a client today,when maybe there, you know, it's
no longer that rates are atrecord lows, and it makes sense
for everyone to refinance. Andmaybe they're not buying or
(29:39):
selling? I don't know. I'mcurious if what you're seeing
lenders do if you're seeinglenders do anything to add value
to their clients, or any ideasthat you might have on, you
know, what, what, what can alender do to serve their clients
during this time if it's anykind of advisory work or
valuation or share you know,webinar Arthur, just sharing
(30:01):
feedback on kind of like whatyou're talking about about what
else, you know, we're seeing inthe market, any ideas come to
mind for you? Yeah,
Chase Johnson (30:09):
I mean, something that, you know, intentionally
that I'm trying to do this yearis provide the market with, you
know, short snippet feedback ofkind of where each lender type
is in a particular week. And so,you know, as we are in the
market, you know, kind of alltimes with different motor
types, you know, hey, here'swhere the agencies are, here's
(30:30):
what agency product is going toget you the max proceeds, and
the look, you know, the highest,the highest leverage and the
lowest grade, and, you know, andthen going into the bridge
lenders and saying, Hey, here'swhere the bridge lenders are
market is change, and here's howit's changed. And then going
into, you know, kind of, youknow, a few different classes
(30:50):
of, of capital sources there,you know, I think that, that
giving away some of thatinformation for free on the
front end committee, goodwill onthe back end. And then like, as
you have deals that come in, notevery deal, unfortunately, isn't
as easy as it is as a 10 yearfamily with the Latino that some
(31:11):
of them are right. And like, youknow, we support the investment
sales team there, CushmanWakefield, that has, you know,
we're seeing a lot of volumethrough them. And so we get to
see a deal by deal basis. Allright, what's the in place debt?
Is it assumable? What's thatdebt service? What's that debt
service payment, compared towhat if I do a new loan right
(31:32):
now, because of doing acomparative analysis and saying,
you know, not only like,comparative analysis, A versus
B, but A versus B versus C,versus maybe D, you know, and
saying, Hey, look, there are alot of ways to skin this cat.
And you can assume this loan, ifyou want to, for sure. And
(31:53):
you've got a loan in place,right? Let's enterprising, you
got two years left on it. Andmaybe you know, you're not,
you're probably whatever $3million lower in proceeds and
what you can get today, andmaybe a little higher rate, but
you're going to have an interestonly period on the front end.
And here's what your cash flowlooks like, side by side. And
(32:16):
although that might have lookedlike the right decision from a
30,000 foot view, and you get aweek, maybe a payoff, and that
loan doesn't make sense. And ata certain, you know, it's
sometimes that the answer is gowith the assumption, you know,
being able to show clients onpaper, what the math is, and
comparing it side by side, thesimple way is, I think, a way to
(32:38):
go, you know, the the nextlevel, if someone instead of
saying, Hey, here's your quote,you know, well, there's a lot
more options than a five yeardeal you can do you want to
really fix it as long right now,for 10 years, we're going a
little shorter, we're going togo the immediate forward. And
you know that a lot of peopleare talking about fillers right
(33:00):
now. But the word spreads arepretty wide and the benchmarks
really wide. So I don't know,maybe you looked at a five year
deals and flexible prepay. Likethere's a lot of ways to look at
it. And I think the best thingis, is you know, talk to your
client, and really understandwhat their business needs for
(33:22):
the property. How long are yougoing to be ended up in here?
What are you planning on doingover the term of your role and
matching the product thatcomplements their sheds?
Mordecai Rosenberg (33:33):
It comes back to actually listening.
Right? Exactly, yeah. Like yousaid, you're seeing a ton of
volume through your Cushmandivestment sales team, having
lots of clients having lots ofclient meetings, still, you
know, lots of pitches. You'rewe're sitting here, you know, in
the towards the beginning ofJanuary 2023. What are you
(33:54):
seeing what's going on in themarket? Are people starting to
think about buying at today'slevels? Are people starting to
think about selling, who'srefinancing? Are there gaps?
Let's start with buying andselling. You know, we'll work
out we'll talk about, you know,dead situations that you're
seeing.
Chase Johnson (34:13):
Yeah, so, I mean, I'd say that on, you know, from
what I'm hearing, you know, overthe first week of the year, so
we do Monday morning calls withthe Sunbelt team. So that's
Texas to Tennessee, every marketthat we have in that region,
every single person last week, Ihad mentioned that activity has
been off the charts with regardsto you know, buyers looking to
(34:37):
find deals to do sellers,trying, you know, as hard as
they can to meet the market. AndI think that with regards to you
know, but you know, actualtransactions, the sellers are
going to transact when there isa true market presentation. What
I mean by that is that if I onlyinvest with sales broker for me
(35:00):
be successful and to have aseller that transact, I can't
show him one bit, I've got toshow him five plus 10 bit, just
like you should show them in thegreat times, right? And say,
hey, look, guys, I know you wantx, but the top 10 buyers in the
country bid within 4% region.
This is the market. And, youknow, I think that if you can
(35:26):
get from a buy sell side,basically, you know, inform a
seller on where the market is,then there's a higher likelihood
that you'll have transactions,that once we receive, you know,
some stabilization, from a rateperspective, we're going to have
a little, maybe this pricediscovery mode will become a
(35:46):
little bit clearer. And we'regoing to be able to have a
little more certainty in ourunderwriting, whether that's
interest rates, whether that'san exit cap rates, that
stabilization is a key. And whatI did see over the first week of
the year, is that Treasuries aredown from Monday to Monday,
they're down across the board,five, seven and 10. year
(36:07):
treasuries down, like anywherebetween 20 and 30 days are
pretty good and decrease in thefirst part of the year. So what
that means to me is that bondbuyers are looking at the
market, and they're saying, Hey,I'm looking five, 710 years out.
And I'm thinking that we're in abetter spot than we are today. I
do think that is providing mewith a little more confidence,
(36:30):
looking into my crystal ballthat I have, you know, really
you take my thoughts with agrain of salt, but I mean, it's
just like, I think the bondbuyers are at least saying that
they're they're seeing some sortof stabilization. That's a good
sign.
Mordecai Rosenberg (36:45):
Here, whenever you buy a property,
you're taking a gamble somemarket is going to perform on
where interest rates will be atthe time your loan matures, you
know, or when you have to sellthe asset. Yes, that's if you
raise money in a fund, if rentsare going to continue to
increase, there's three otheryears, there's things there's
(37:05):
risks that you're taking, attimes like this, where it feels
like the future is unknown,because like you don't know
where you see interest ratesmoving very, very quickly. I
know, I know the risks that I'musually getting into and a
stable market. I know, maybeI'll assume exit cap rates of
either flat or maybe up a point.
But if I see interest ratesrunning up fed being aggressive,
well now that maybe is a scarierprospect. Right. But as soon as
(37:29):
the Fed slows down, I feel likethat also calms people's minds a
bit. So even they're slowing youjust how much they the Fed was
raising rates that maybe gives alittle more peace of mind to
people. I was listening to apodcast recently with JP
Conklin, yawns, loan boss andpence furred. And he said that
(37:51):
when the Fed stopped raisingrates, Cap prices dropped by
50%. Within, like, a couple ofmonths, what's the basis for the
price of the cap? Well, one isthe expectation of future
interest rates when you thinkrates are going to be but the
second thing is volatility.
(38:11):
Right. And so if you're takingvolatility out of the equation,
all of a sudden, like theballoon deflates by by half.
Chase Johnson (38:18):
That makes a lot of sense.
Mordecai Rosenberg (38:21):
So we meet, you know, hopefully, we're
starting to see that incommercial real estate market as
well. On the debt side, there'sa lot of thought that we're
going to see a lot of gaps inrefinancing those shortfalls,
you know, that people who boughtyou know, when rates were at two
plus percent, or maybe theybought with a debt fund
underwritten at pro forma, andrealize that they're going to
(38:43):
when they hit low maturity,there's gonna be a shortfall.
Are you seeing any of that yet?
Or on the horizon?
Chase Johnson (38:50):
Yeah, I mean, we are seeing that we even if it
doesn't matter, if you hit yourbusiness plan perfectly on the
head, if you didn't dial in yourinterest rate, I mean, we look
at software and over the last 12months, it's increased to 400
basis points. So if you areunderwriting, you know, you go
from point zero 4% to 4%. Likein quick, and so no one really
(39:17):
underwrote that. And so I thinkthat you can even hit your
business plan perfectly on youknow, perfectly on point and
still be in a tough situation.
And so we're seeing the bigtrend that we're seeing there is
that you've got like I saidearlier in the podcast was LP
equities tightened up right nowthey're pinching, you know, for
the most part InstitutionalEquity is still pencils down I
(39:38):
think we're gonna have waybetter insight, you know, after
kind of MBA in February, maybeafter NMHC at the end of
January, but right now it seemslike they still are in kind of
wait and see mode. I kind oflook at that in them. And I'm
thinking if I'm a JV LPwhatever. Equity provider guy
say I was Happy getting 15 pluspercent on my money at in kind
(40:02):
of the when things were greatand I was competing at that
level. And then now I'm sayingwhat preferred equity and GAP
capital costs 14 15%. And Icouldn't be higher up in the
stack. And I don't have to be inthis first loss for this kind
of, I guess, not first loss, butalmost first loss position that
we're seeing this in real time,the transition from JB equity
(40:23):
prefered and say, Look, insteadof looking in, it's going and
trying to find new deals thatwork today, I'm gonna go find
old deals that don't work today.
And I'm going to provide thegap. So we are seeing a trend.
Mordecai Rosenberg (40:38):
So that's on the capital provider side,
right? They're saying that,yeah, we're going to switch from
LP to press. Are you seeing loanmaturities that are coming up
short? Or do you think it'sstill early? I mean, a lot of
those deals were done. And wewhat we were seeing was, they
would do these three plus oneplus one, if you did one of
those loans two years ago,you're still a year out even
(41:01):
from initial maturity, and youmay have two years of
extensions. So I don't know ifit's that stuff is actually
hitting yet or if it's stilldisbelief?
Chase Johnson (41:11):
Exactly, everything was pretty much done
on a three year initial term,maybe a two year initial term
with two one year extensions.
Those one year extensions,though, you got to remember that
they have requirements that theproperty, you know, operating
has the operations of theproperty within a certain level
to achieve that one, extension.
(41:32):
Good thing is I think most ofthe lenders in you know that did
these bridge loans don't want tobe property owners, they will
extend and pretend and in try toweather the storm with the
sponsor group. As long as you'vegot a good sponsor, it's doing
the right thing that is, youknow, in operations are on par
(41:52):
with what he presentedinitially, I think they probably
would bid, and they'll allow youthat extension, and I'm not
seeing right now, with the floodof distressed deals. I'm seeing
a flood of operators and equityproviders that are on the
sidelines looking for blood inthe water, and it's just really
not there like that. I don'tknow if that changes six months
(42:16):
from now, or what but you know,right now we are seeing a flood
of I mean, maybe, you know, atriple hit here and there, but
not, not with all the upgrades.
Mordecai Rosenberg (42:27):
Yeah, we'll see what happens. Yeah, I'm
trying to think back to like,2008-09. And there, you had a
serious crunch very quickly, andwhy that was, but there, I feel
like you had banks really pullout liquidity at all levels,
right. So like, you know, we asa lender, we're having our lines
pulled, right. And so if you'rehaving your lines pulled, now
(42:49):
you can extend your loan to yourclient, because your debt source
is wants their money back. It'sa it's a domino effect. Right.
So yeah, the mean, the repomarket, right, the overnight
lending market evaporated in,you know, in? Oh, 2008-09.
Right. So, is that lead dominothat affects everything else?
Most loans are doing prettywell. I mean, if you if you have
(43:11):
your lower rate, yeah, I mean,look, if you had a floating rate
and it ran up, okay, so maybeyou have some challenges, but
maybe it was IO. maybe therewere some room there. Okay, if
you've got a cap, all right, youhave a cap also. So like that
kicked in, you have caps. I alsoI mean, I get calls from people
who are interested in they wantto buy their distressed debt
(43:34):
buyers, like we want to buy yourdistressed loans. You know, it's
like, alright, easy there cowboyfor okay.
Chase Johnson (43:39):
Yeah, it's not I don't have just a ton of
distressed loans that I'm readyto sell for pennies on the
dollar. Yeah, it's yeah, it'sjust not there.
Mordecai Rosenberg (43:48):
Exactly.
Right. Plus, I feel like one ofthe the lessons that I think
people are more sensitive to therelationship these days, you
know, and you can't like tosell, you know, you have a
relationship with a client andthey trust you to make a loan.
You can't just sell the loan outfrom under them, to a Parana.
You know, that doesn't feel.
Exactly, yeah. So, just in ourlast few minutes, let's say if
(44:14):
you went back and spoke toyounger, Chase Johnson, when you
were first starting out, anyadvice you would give your
younger self words ofencouragement or advice,
anything? What would you whatwould you tell a younger version
of yourself?
Chase Johnson (44:28):
Gosh, I don't know. I would just, you know,
make sure to kind of hammer ithome. It's like, Look, man, do
like work hard. It's not youknow, nothing is easy. Nothing
worth anything is is easy. Andyou know, if it was that
everyone would be doing itwouldn't be worth anything.
Don't be afraid to work hard,and you know, work hard and do
(44:50):
the right thing. That's whatadvice I'd give.
Mordecai Rosenberg (44:52):
I think that's very true. I've also seen
to be fair, I've seen a lot ofpeople work very hard and still
fail because Whenever it justwasn't the right fit for them,
right? Was there a moment whenyou realized, oh, yeah, this is
something I could do.
Chase Johnson (45:08):
Yeah, I mean, early on, like I was, you know,
I got out of school, I was ananalyst for that small boutique
mortgage company. And, you know,I was making, you know, very
entry level type of salary. But,you know, you start looking
around and you start saying, oh,man, he just made X on that one
deal, or whatever, like, youstart looking and you can kind
(45:29):
of see the light. And and sothat was sofa, right? It was
okay, I wouldn't be How quickcan I get there? That's what
gets me up everything. What getsme up every day, is that ever,
no deal. No two deals are thesame. You are directly
incentivized by your production.
And you can, you've got thefreedom to kind of do what you
want within a certain range.
(45:51):
And, you know, there's no otherbusiness that I you know, I'm
not looking for anotherbusiness, but I'm just saying, I
haven't found anything thatmatches what commercial mortgage
making can provide someone withregards to flexibility, income,
and just general, you know,stimulation of your brain,
(46:12):
allowing you not to just feellike you're stuck in his
monotonous task, you know,hitting the same five keys every
day. You know, so it's just,it's, it's really been great. I
feel lucky to be, you know, tohave found it such a, you know,
as such an early part of mycareer. I mean, there's a lot of
people that had to work in adifferent industry for 10-15
(46:34):
years before they found whatthey feel like it's the right
Mordecai Rosenberg (46:38):
I like hanging out with technology fit.
people in tech, because you talkto them, and they have this,
this feeling that everything ispossible. It's like, yeah, you
want to build that? Sure, we cando that. You want to do that?
Sure, everything is possible. Ifind that brokers also, you
know, have that mindset of like,you know, even when times
(46:59):
there's always the optimism ofpossibility. You only takes one
lender that only takes That'sbrilliant. It only takes one
lender. Thank you for coming on.
And I love the the positivityand optimism. I think it's also
it's important for people to,especially in times like these
to surround yourself withoptimistic people, right?
(47:21):
Because that has a big impact,you know, so being on a team
with others who can energize youand even in your personal social
life, just surround yourselfwith positivity. Yeah. So thank
you Chase for being a source ofsunshine.
Chase Johnson (47:37):
Awesome. Well, I appreciate it. Thanks so much
for having me on today. And Ilook forward to seeing you
again.
Mordecai Rosenberg (47:44):
Awesome.
Thank you, Chase. I'll talk toyou soon. Bye bye.
Hey, it's Morty. Welcome back to the
Origination podcast, where wespeak to the top salespeople in
the multifamily industry to tryto understand what separates the
top performers from the rest ofthe pack. On this episode, I'll
be speaking with Chase Johnson,Managing Director at Cushman and
Wakefield and Greystone. We knowsales is not easy, but is it
(00:26):
always complicated? Chaselearned very early in his life,
that sometimes it's just assimple as listening to the
customer, listening to what theywant, and then delivering that
and doing what you say. This isjust one piece of so many great
nuggets of advice that you'llhear on this episode. I'm sure
you'll enjoy it as much as Idid. So without further ado,
(00:49):
let's speak with Chase.
Chase Johnson. It's a delight tohave you on the origination
podcast. Welcome to the show.
Chase Johnson (00:59):
Thanks a lot more than happy to be here.
Mordecai Rosenberg (01:02):
Awesome.
Chase, you know, we got to spendsome time around the holidays in
New York, any kind of memorableimpressions that you have from,
you know, being around townduring that holiday season? This
year, anything surprised with
Chase Johnson (01:15):
You know, it was great. It was exactly how New
York should be during Christmastime. You know, we got to walk
around. And I think we went to,me and my analysts, we went to
Rockefeller Center and took aselfie in front of the front of
the tree. And it was, it was adefinitely a good fun
experience. And it was awesometo see Greystone and meet
(01:38):
everyone. So it was a greattime.
Mordecai Rosenberg (01:40):
You came at exactly the right time, because
everyone's in a good mood, youknow, Thanksgiving when you have
a holidays. Then about, Well,exactly. January 2, straight
through March 1, everyone goesinto a state of depression as
it's just cold.
Chase Johnson (01:53):
And, you know, not too much fun, is like I was
telling someone earlier, youknow, I'm here in Austin, Texas,
and you know, I was tellingsomeone earlier, so like, you
know, the cold weather is greatup until December 25. And then
I'm gonna be done with it. Yeah.
You know, after the holidays,I'm not much of a cold. Yeah.
booziest.
Mordecai Rosenberg (02:14):
Alright, well, Chase, why don't we start
out with the the question thatthat I usually start with, which
is, you know, if you think aboutearliest sales experience, you
had the first memory of failingsomething, and it could be when
you were little, it could behigh school, college after
college, but anything could cometo mind.
Chase Johnson (02:32):
Yeah, absolutely.
So, you know, my first salesexperience, probably working in,
in Baybrook mall in, in SouthHouston area. And so, you know,
whenever I was 16 years old, mymom was, my parents were nice
enough to give me a vehicle to,to drive around. And so I was
(02:54):
super excited about that. Butthey were saying, hey, look, you
got to pay for your, your gas.
And so you gotta go find a job.
I went to the mall, and I foundthis place, there was a kiosk in
the mall. That's funny. Theythey did it was called invisible
shield, they did iPhone screenrepair. And they did like screen
protectors. So like, it wouldbe, you know, a just a screen
(03:17):
protector that goes on yourphone. And in so, you know, I
saw the guy sitting there, I waslike, man that looks like kind
of like a easy job. You know,you just put screen protectors
on people's phones and sit inthe middle of all and people
watch. And so I went up to him,and he got the job. And, you
know, did my little training orwhatever, on how to apply the
(03:39):
screen protector, and it was nottoo difficult. And then, you
know, as I was working there,people would come up to me, and
they would say, hey, you know,can you fix my lunch? And so I
was saying, hey, no, we can't dothat. We just put the screen
protectors on the phone so thatyour phone doesn't crack when
(04:01):
you drop it next time. So you'regonna have to go to Apple, and
you know, get the screenrepaired and then bring it back
to me and I'll put the screenprotector on. And so after about
like 1015 20 times of peoplecoming up to me and asking me
the same question they were Iguess the marketing of that
kiosk was a little off you know,people were thinking hey, you
(04:24):
know, you can repair phonescreens. And so you know, I kept
saying no and then one day myphone I dropped my phone on the
ground and I don't know if I hadan invisible shield on it or
not. But but the screen didcrack. And so I went on YouTube
and I learned how to repair thephone screen you buy like a
(04:45):
glass online and it comes inyour house and there's a little
screwdriver and little screws orwhatever but it was real easy.
Back in the day. It was with theI remember vividly it was like
the iPhone three jeans or outthey had a black back and it
washer, it was like the coolestthing. And so the thing he did,
it was the easiest thing we didwas two screws at the bottom.
(05:06):
And then you get a littlesuction cup. And it brings it
up, there's like three littlethings, you know, electronic
components that connect to themain motherboard or whatever.
But I had no electronicsbackground back then. But I was
too broke, to go to apple andpay, I was like, I can save 50
bucks if I display the screenonline and do it myself. So I
(05:27):
did it successfully on my ownphone. And I was, you know,
going back into work, andsomeone asked me, Hey, can you
do you know, my screen gotcracked and repaired? And I'm
like, yeah, we can repair it.
And so that's kind of the first,you know, time where I felt
(05:48):
like, you know, at least from anentrepreneurial type of
perspective, that, you know,yeah, I can really make money
selling something. And that, youknow, there is an identified
need. And I'm, I think I'm ableto fill it in. So I went on in,
you could go to whateverwebsite, what are the screens, I
(06:08):
ordered, like two or threescreens. So out of those really
quickly, that did a couple timesfrom kind of a retail
perspective. And then I decided,you know, these screens are like
40 bucks and selling for $100.
So I'm making like, $60 profiton each screen, because I was
really good. But I went to thisthing, I guess Alibaba was
(06:29):
really early on at that time,with Alibaba, and I were like,
minimum order, if you want to.
Crack was like, I don't know,like, one of experience. And I
was like, Maybe I'm not going togo on 100. But I talked to him
on the web on the website, and Iwas like, just send me 25. And
(06:51):
so I got 25. Like, I startedgetting the bulk orders. And I
got the price down to like, fiveor 10 bucks and screen. Selling
for $100. I thought I was justlike a genius. And so you know,
that's, that's really the firstmemorable experience of of
selling that I've had, you know,that kind of age and about 16
years old.
Mordecai Rosenberg (07:13):
That that's awesome. It makes me feel
nauseous for all of the $100fees. I paid for to fix screens.
Oh, yeah. For you know, my phoneor my kids, like, you know,
iPads and phones. It's I mean,it's amazing what they charge
for. Yeah. I mean, if you don'tknow, yeah, it's kind of like a
(07:33):
black box. It's like I'mintimidated. I'm scared, I can't
do this on my own. And I need aprofessional to do it, or some
guts that has done it before. Sothat's an awesome sales story.
It's also interesting that thatwhat you were doing was just
listening. You're you're sellingyou're, you're they're selling
these screen protectors, you'reselling some of those, right,
(07:56):
but you're hearing thisrecurring need for, you know,
actually, what I really want is,is if you could help me fix my
broken screen, because that'sthis urgent thing that I have.
Can you help me with that?
Right? And in all you did wasyou responded to? Well, first of
all, you just you listened tothe customer, and you heard what
they had to say. Right? And thenyou responded and said, alright,
(08:17):
well, maybe there's something Ican do to to fix that, that that
problem? I feel like in youknow, in, in our industry, let's
say in multifamily finance, it'sprobably not uncommon for people
to just say like, well, let'ssay I sell Fannie Mae loans.
It's like, alright, well, youwant a Fannie Mae loan? No, I
don't want to offend anyone.
What I really would like is actslike, I'm sorry. We don't we
(08:41):
don't do that. Right. So you canhave that approach. Or you can
say, well, after you hear enoughtimes that there's a particular
need for something else, you cantry to find a source for that. I
wonder if that brings upanything for you as far as your
approach? Yeah. In your currentrole in capital markets, and in
(09:05):
commercial real estate, the roleof listening, any examples that
come to mind about that kind oflike, just really like listening
and trying to understand like tonew direction?
Chase Johnson (09:17):
Yeah, absolutely.
I mean, I think that, you know,just recently, you know, we've
seen kind of, you know,obviously a bunch of volatility
in the, in the financialmarkets, whether it's on the
debt side, or the equity side,over the last, you know, I don't
know, five plus years that theequity JV equity was easy to
come by, right. So if you were asponsor that had a few good
(09:37):
fullcycle deals under your belt,you had no problem raising your
LP equity. And whether that wasfrom friends and family or
whether it was from aninstitutional type of investor,
you really didn't have troubleas long as you were a good, good
operate. Right? And, you know,obviously those that struggled
in the equity space back thenwere Probably someone Little
(09:59):
Reader opinions versus secondproject, whatever it is, those
type of assignments wereprevalent back then. But now
today, we can see that the LPequity markets have really,
really tightened up. And we'veseen, you know, a lot of those
types of requests come throughwith strong operators, right. So
you've got, you know, operatorsthat have been in business for
(10:23):
20 plus years, that have gonefull cycle on dozens and dozens,
if not more projects, andthey're, you know, coming to us
now saying, hey, I need equityended up, my guys are on the
sidelines are pencils down. And,and that's something that, you
know, it's not easy to go findin this market, you know, LP,
equity money, there's no nothingworth anything of substantial
(10:46):
amount is easy. And so weunderstand that. But there is a
shift in that mean, it seemslike recently in, you know, JV
equity introductions. And sowe've kind of, on a selective
basis, taking those assignmentson with strong sponsors, what
we're seeing is that, you know,this gets you in the door with
(11:06):
an operator, a developer, orwhoever that otherwise would
have not really had a need foryou in a really shiny market.
And so that is a leader intocapturing their debt business as
well. So if we're doing theequity, we want to do that. And
that's an easy trade there. Andso it really does open the
(11:27):
conversation up, if you can kindof widen your approach from you
know, hey, this is this is theonly product that I sell, if you
can kind of widen that out andsay, Hey, what do people need
right now, and really dial it inand go find that? Yeah, and that
requires conversation. I mean,it's probably easy in let's say,
(11:48):
a market, that's very slow tosay, alright, I'm not going to
pick up the phone, because Ihave nothing that really offer
in this market. But it's youneed to stay in conversation in
order to keep your ears open tothe new needs that are emerging.
Absolutely. And, you know, we'redata driven. And so you know,
those conversations that we'rehaving, whether it's with a
(12:10):
lender, or with an equityprovider, you know, we keep it
very simple on the datacollection side, but we are
collecting data on what theirprograms look like, you know,
from you know, where they playin the stack. Are you a first
mortgage lender? Are youpreferred equity? Only? Are you
JV equity? You know, are youwilling to coach up with a green
sponsor, I mean, you know, allthose types of things, we're,
(12:32):
you're kind of tracking as we'rehaving conversations with
lenders, as well. And, you know,for us, if we do our work on the
front end, as we're having theseconversations, it's easy to
leverage the borrower, orsponsor comes to us, because
LinkedIn is go to our databasethat we've got, you know, always
updating our database and say,hey, look, this is the need, we
can filter out who we've talkedto recently that might want to
(12:55):
offer that product. That'sgreat.
Mordecai Rosenberg (13:01):
You've mentioned to me in the past, you
talked about being data driven,and just asking the right
questions and sharinginformation, we've talked in the
past about your approach withprospects and clients and banks,
as well about how everyone wantsto know what's going on in the
market, just us sharing yourknowledge and the data that
(13:23):
you're gathering, you know, tojust add value to, you know,
others that you're talking to,and to build, build those
relationships. When you thinkabout it, you know, during the
time that you know, I guess,quarter three, quarter four of
2022, we've got turbulence,we've got people that are
either, you know, a lot ofpeople are pencils down here to
the ground, trying to figure outwhat's going on, you know, I am
(13:45):
too. And so both on the borrowerside, and on the lender side, or
let's say, on the equity side,and the sponsor side, whatever
you want to say, you know, it'sfunny, I maybe send the joke to
you at dinner, it's like we had,we were talking to the
borrowers, they were askingwhere the rates were, and then
we're talking to the lenders,and they're asking where the
(14:05):
rates were. So it's like, no onereally knew, you know, in these
kind of volatile times,everyone's trying to gather
information. And well, I'vealways kind of made a
cornerstone of my kind ofbusiness philosophy is that I
want to be transparent witheverybody, you know, I'm going
to tell you how it is. And youknow, no matter what, if it's
(14:26):
the, you know, I'm going to tryto say, the best way possible,
but in and I think that lendersreally like that as we're going
out to market and a competitiveprocess, where we say, hey,
look, we've got these three tofour quotes on the table. And
this is the best one that we'releaning towards. And if you can
get there definitely we'd loveto throw your name into the
(14:46):
ring. But if you can't, I don'twant to waste your time and you
know, kind of be verytransparent on not only kind of
market intelligence on a generallevel, but also want to do a
specific level. And I think thatreally for
Chase Johnson (15:00):
adds value directly to the sponsor or the
borrower. In that case, whereyou're saying you're You really
are truly creating market andyou're not, you know, you're
you're creating transparencywith the lenders. That
opportunity.
Mordecai Rosenberg (15:12):
So to your point about borrowers want to
know where rates are and thelenders want to know where rates
are. The interesting thing isthat as you're having
conversations with both sides,you can answer that question for
both both sides. Right, you canyou can you're accumulating
those conversation points. Andin this market where there is
no, there isn't a lot oftransparency, not for any ill
(15:37):
intent. But just because thingsare moving so quickly. And it's
hard to know what what's goingon. Just, again, being in those
conversations, talking to peopleasking questions. And listening
now gives you more informationthat you can have in that next
conversation,
Chase Johnson (15:54):
exactly how it compounds on each other, for
sure. And you're able to kind ofpick up pieces from one
conversation to another andformulate your own opinion about
where the market is.
Mordecai Rosenberg (16:06):
Going back to your, let's say failed
history. Any particular salesrole models that you've had in
your career that you look to islike, wow, like you saw someone
who just, you know, a ring oflight around them when you saw
them clip closing deals, and anyjobs that just really inspired
you or taught you in thisindustry?
Chase Johnson (16:26):
Yeah, I mean, I think that, you know, what,
whether I would call it a salesroom, roll monitor model or not.
You know, one person that comesto mind for me is, is my boss
for the last eight years. So Iwas at this a little background
on me, I started out with acompany called Texas Realty
capital, we were a smallboutique commercial mortgage
(16:47):
banking platform that originatedlike, life insurance company
loans for about 20 differentlife companies. We originated in
service, those loans we sold,the owners of that company was
John Moran in June, they werelocal Boston guys had been here
forever. And then they ended upselling the, you know, their
business to North mark and April2019. And subsequently, in
(17:11):
September of, I guess, 2022 Imoved over to Greystone and in
Cushman Wakefield and so, youknow, John Moran really was my
mentor, as I got out of school.
And, you know, the, whether Iwould say that he was my sales
role model or not. But I wouldsay that, you know, he's
definitely my, my commercial,real estate, finance and also
(17:33):
character model. And I thinkthat that goes a long way, when
you're, you know, whatever, TonyRobinson or whatever, or
whoever, you know, these largekind of faces in the industry,
you know, they they have,there's, there's, you know, kind
of that hoo, rah type ofmentality, and then there's also
(17:54):
this kind of, Hey, be good to,you know, people in goodwill
follow up. And if youconsistently be good, and be
transparent with borrowers andlenders, and if you get the
right thing, even when it mightbe hard to do the right thing,
then everything's gonna workout. And so that's really kind
of the main thing that keytaught me, and then I think it
(18:16):
does go into sales, right? Imean, it's, you know, it's maybe
a little different than pickingup the phone and not not stop
calling until you hear a yes, orsomething like that. But I think
in our industry, that's notreally the way that it works. I
mean, you can't force somebodyinto these types of products
that we're selling, have longer,you know, close cycles, they've
(18:41):
got longer signup cycles,they've got, you know, it's a,
it's a long game. And so I thinkas long as you are doing the
right thing for, you know, yourcustomers, whether they're a
borrower or lender, then thenyou're going to be alright.
Mordecai Rosenberg (18:58):
Yeah. Do you remember in maybe in some of
your early meetings with John,you're anything that you learn
from how he presented to clientsor from pitches like anything,
you know, that that stands out?
As far as Yeah, his approach?
Chase Johnson (19:13):
You know, I think being curious about the math of
it, like being curious of how,how does, how does debt, you
know, we all we have debt yieldas a measure, well, why do we
measure dedicated, you know,what, why do we measure debt
service coverage? You know,really kind of getting into the
fundamental details and maybecoming up with, you know, I
(19:36):
think also explaining somethingthat might be a little more
complex to the left instead oflaying down in explaining that
in a simple form, really is, isI think the way to kind of that
you know, that you've maybemastered your craft is being
able to kind of explainsomething that was maybe
difficult, you know, to graspit. Maybe on your front end and
(20:01):
explain it to someone in a verysimple, simple way that makes a
lot of sense. And I don't knowif that answers your question,
but keeping keeping it simple.
Mordecai Rosenberg (20:10):
Yeah, yeah, my, my, my father, he likes to
say that if you can't explain itto a third or fourth grader,
then you probably don'tunderstand it. Right,
Chase Johnson (20:20):
exactly. And so I think that that goes a long way,
Mordecai Rosenberg (20:24):
just over the last 18 months, 24 months,
we've had kind of two ends ofthe bell curve in terms of the
market activity, right, you'vehad just a time where we never
seen more sales and REITs wereat record lows, capital was
available from you know, allcorners, than we have today,
(20:45):
where rates have increasedsubstantially, the market can
grind it to it to a halt. Verydifferent environment. I'm
curious, you've had lots ofdifferent clients, you probably
learn about your clients in goodtimes and in bad times. Yeah,
any kind of instinct that you'vehad about, you know, what makes
for a good client, or what kindof clients maybe you would want
(21:09):
to avoid? In, you know, in thefuture, you know, based on, you
know, your, what you've seen ingood times, and now in
challenging times, like insightsabout what the client profile,
you know, what could be theircharacter, their mindset, their
their anything else,
Chase Johnson (21:26):
I can give you two examples of maybe one kind
of in this was maybe more of aCOVID example than a, but it
still kind of goes into thetheme. We booked, I don't know
$250 million worth of commercialmortgages with a few different
life insurance companies with awith a client of ours that owns
(21:47):
enclosed malls around thecountry. So some of the hardest
product type defining some ofthe most disparage kind of got a
market, we successfully foundthe right lender. And then
COVID, loaded them up with abunch of a bunch of long term
fixed rate money, and COVID.
And, you know, I was shaking inmy boots, I'm like, Oh, my God,
(22:10):
because we had, you know, guysthat were owning whether they
were office buildings, or it wasless on the multifamily side,
but it was mainly office andretail that was kind of, you
know, we're getting calls off,you know, back to back, hey, I
need relief, I need help, I needflipping interest only or I just
need to defer my paymentsbecause tenants aren't paying
(22:31):
rent, I senators aren't open,you do really understand the
character and bad time. And thatclient followed me up in the
thick of it. Every single one ofhis malls were were forced to be
closed in the middle of it bythe municipalities because of
because, and he called me up andhe said, Hey, Jason, I just want
(22:53):
wanted to let you know, if youcould relay the message to the
lenders that we did deals with,I want you to let them know, I'm
intentionally not going torequest the dollar relief, I'm
going to pay my 15 year ends, asyou know, like super quick
amortizing loans that weoriginated. And I believe in
these properties, and we'regoing to be stronger on the way
(23:16):
out of this thing. And I justwant to let you know that we're
all good. And so that wassomething that really kind of
took me aback. And I think thatthat's something that into the
next cycle is going to propelthem even further. Right? So you
doing the right thing, in thebad times, is going to pay off
(23:36):
in the good dad's, I reallycommend him for his decision in
there. And I think he wasdefinitely trying to make a
point, if you didn't get one,and those lenders are still to
this day, love to do businesswith, you know, I don't know, if
they would have the samesentiment, and he had every
right to go and request interestonly or, you know, man just
(24:00):
moving from a 15 year to a 25year amortization for a few
months, you know, give him some,and they were saying they were
already, like, hoping not hopingbut they were already pretty
much understanding that they'regetting it from all angles, he's
probably going to be one ofthem. But he decided not to. And
I think that went a long way.
(24:21):
And then the second, you know,kind of opposite type of, you
know, encounter was we had, youknow, COVID hit, and we had a
borrower that, you know, whatwill you do? Because we serve as
a bunch of mortgages, what wewould do is we would we would
come through and we'd sayalright, send us a send us your
rent wall and let us know whichtenants are either paying rent
(24:43):
and not paying rent, give us astatus on each one of the
tenants and maybe even justconversation, you had to even
get some color about what'sgoing on right now. And so, we
had a sponsor come through, andwe did an office building with
them. And he said Nearly sixmonths after selling my office,
(25:04):
here's your rent roll, fill itout, and let us know the status
of each tenant. He says, All thetenants are paying rent. And,
you know, it's but everyone elseis getting six months, I want
six months. And I was like, Hey,man, you know, that's probably,
you know, not the rightapproach, we'll chase we got, we
(25:25):
need six months, go get, youknow, forcing my hand to request
this from the lender. And whoknows if that deteriorated the,
you know, sentiment with thatlender in particular, but
there's kind of two ways to goabout it. And I think that, you
know, the way that my mall guywent about, it was a pretty
commendable way. It probably wasthe, you know, not the best on
(25:46):
his pocketbook. But, you know, Ithink he's gonna be just fine.
Mordecai Rosenberg (25:50):
And you want clients, first of all, who are
committed to their property? Imean, there are, look, we're in
a money making business, right?
So people are, you're not buyingan asset, to not make money on
it. It that's the reality. Atthe same time, there are certain
clients who will do the leastthat they possibly can do, right
(26:11):
to fix a glaring problem, youknow, the, you know, you know,
they used to call it like,putting lipstick on a pig or
something like that, you know,that's a Texas phrase. Oh,
that's
Chase Johnson (26:26):
a phrase. Yeah, yeah.
Mordecai Rosenberg (26:28):
Yeah, I didn't hear much in, you know,
Keeper school growing up. Butthen there are others who are
really who have are committed tothe property and to the tenants
to those people are also, youknow, probably tend to be more
committed to their partners asfar as like just doing what they
can do, you know, to make a,because it's what a retail.
Chase Johnson (26:52):
I mean, there's a lot to be said about, you know,
obviously, your reputation. Andthe world of commercial real
estate is is small. I mean,it's, it's not this, it seems
large at some perspective, butwhen you get down to it, there's
so much crossover, and peopletalk and leave. There's these
large conferences like NMHC, andNBA. And I mean, you know, these
(27:17):
things happen, and people talkpretty quickly, and Word travels
quickly. And so, unfortunately,all your good deeds don't really
travel as quick as your baddeeds, right? Like, something
happens, where someone maybegets in a dispute with a
partnership, and there's somecontroversy that rolls around
the market very quickly. So youknow, avoiding that at all cost,
(27:41):
I think is definitely animportant key to being
successful in the industry. Andit kind of goes back to what we
originally said, it's like, justbe transparent. Do the right
thing. And everything should beokay. Work hard. Simple stuff.
Mordecai Rosenberg (27:58):
Yeah. Yeah.
One, one idea for you. Yeah, Ithink that the client who you
mentioned, who, you know, stayedwith, you know, said even in the
middle of COVID, they weregonna, you know, keep on keep on
paying. It would be you if youwent out to lunch or dinner with
them, and said, Look, I realizethat here's a really admired
what you did, I'd love to dobusiness with more people like
(28:20):
that. I mean, I'm committed tomy business, and I want to work
with people who are committed totheirs. Yeah. And is there
anyone else that you think comesto mind that you that kind of
shares your, your mindset thatyou think would make sense to
me, might be an interestingconversation, because first of
all, people like being seen andrecognized, you know, and that
was something that he did, thatperson did, because they thought
it was the right thing. Butpeople like to be recognized.
(28:43):
And, and to, you know, when yousay, Look, this is how I see
you, and they relate to thatpicture. It there's a resonance
that they that they feel, thatmight be a interesting way to
kind of expand the circle of,you know, committed client.
Right,
Chase Johnson (29:00):
like minded individuals, and individuals.
Yeah, absolutely. And, you know,people want it. Yeah, I mean,
people want to do business with,you know, who they they like and
who they trust. And, and, yeah,who's better endorser than, you
know, a person that you'd liketo trust?
Mordecai Rosenberg (29:17):
Right, exactly. I'm curious. And this
is for my own, I guess, marketresearch. You know, one of the
things that we're trying tofigure out is, you know, how can
you add value to a client today,when maybe there, you know, it's
no longer that rates are atrecord lows, and it makes sense
for everyone to refinance. Andmaybe they're not buying or
(29:39):
selling? I don't know. I'mcurious if what you're seeing
lenders do if you're seeinglenders do anything to add value
to their clients, or any ideasthat you might have on, you
know, what, what, what can alender do to serve their clients
during this time if it's anykind of advisory work or
valuation or share you know,webinar Arthur, just sharing
(30:01):
feedback on kind of like whatyou're talking about about what
else, you know, we're seeing inthe market, any ideas come to
mind for you? Yeah,
Chase Johnson (30:09):
I mean, something that, you know, intentionally
that I'm trying to do this yearis provide the market with, you
know, short snippet feedback ofkind of where each lender type
is in a particular week. And so,you know, as we are in the
market, you know, kind of alltimes with different motor
types, you know, hey, here'swhere the agencies are, here's
(30:30):
what agency product is going toget you the max proceeds, and
the look, you know, the highest,the highest leverage and the
lowest grade, and, you know, andthen going into the bridge
lenders and saying, Hey, here'swhere the bridge lenders are
market is change, and here's howit's changed. And then going
into, you know, kind of, youknow, a few different classes
(30:50):
of, of capital sources there,you know, I think that, that
giving away some of thatinformation for free on the
front end committee, goodwill onthe back end. And then like, as
you have deals that come in, notevery deal, unfortunately, isn't
as easy as it is as a 10 yearfamily with the Latino that some
(31:11):
of them are right. And like, youknow, we support the investment
sales team there, CushmanWakefield, that has, you know,
we're seeing a lot of volumethrough them. And so we get to
see a deal by deal basis. Allright, what's the in place debt?
Is it assumable? What's thatdebt service? What's that debt
service payment, compared towhat if I do a new loan right
(31:32):
now, because of doing acomparative analysis and saying,
you know, not only like,comparative analysis, A versus
B, but A versus B versus C,versus maybe D, you know, and
saying, Hey, look, there are alot of ways to skin this cat.
And you can assume this loan, ifyou want to, for sure. And
(31:53):
you've got a loan in place,right? Let's enterprising, you
got two years left on it. Andmaybe you know, you're not,
you're probably whatever $3million lower in proceeds and
what you can get today, andmaybe a little higher rate, but
you're going to have an interestonly period on the front end.
And here's what your cash flowlooks like, side by side. And
(32:16):
although that might have lookedlike the right decision from a
30,000 foot view, and you get aweek, maybe a payoff, and that
loan doesn't make sense. And ata certain, you know, it's
sometimes that the answer is gowith the assumption, you know,
being able to show clients onpaper, what the math is, and
comparing it side by side, thesimple way is, I think, a way to
(32:38):
go, you know, the the nextlevel, if someone instead of
saying, Hey, here's your quote,you know, well, there's a lot
more options than a five yeardeal you can do you want to
really fix it as long right now,for 10 years, we're going a
little shorter, we're going togo the immediate forward. And
you know that a lot of peopleare talking about fillers right
(33:00):
now. But the word spreads arepretty wide and the benchmarks
really wide. So I don't know,maybe you looked at a five year
deals and flexible prepay. Likethere's a lot of ways to look at
it. And I think the best thingis, is you know, talk to your
client, and really understandwhat their business needs for
(33:22):
the property. How long are yougoing to be ended up in here?
What are you planning on doingover the term of your role and
matching the product thatcomplements their sheds?
Mordecai Rosenberg (33:33):
It comes back to actually listening.
Right? Exactly, yeah. Like yousaid, you're seeing a ton of
volume through your Cushmandivestment sales team, having
lots of clients having lots ofclient meetings, still, you
know, lots of pitches. You'rewe're sitting here, you know, in
the towards the beginning ofJanuary 2023. What are you
(33:54):
seeing what's going on in themarket? Are people starting to
think about buying at today'slevels? Are people starting to
think about selling, who'srefinancing? Are there gaps?
Let's start with buying andselling. You know, we'll work
out we'll talk about, you know,dead situations that you're
seeing.
Chase Johnson (34:13):
Yeah, so, I mean, I'd say that on, you know, from
what I'm hearing, you know, overthe first week of the year, so
we do Monday morning calls withthe Sunbelt team. So that's
Texas to Tennessee, every marketthat we have in that region,
every single person last week, Ihad mentioned that activity has
been off the charts with regardsto you know, buyers looking to
(34:37):
find deals to do sellers,trying, you know, as hard as
they can to meet the market. AndI think that with regards to you
know, but you know, actualtransactions, the sellers are
going to transact when there isa true market presentation. What
I mean by that is that if I onlyinvest with sales broker for me
(35:00):
be successful and to have aseller that transact, I can't
show him one bit, I've got toshow him five plus 10 bit, just
like you should show them in thegreat times, right? And say,
hey, look, guys, I know you wantx, but the top 10 buyers in the
country bid within 4% region.
This is the market. And, youknow, I think that if you can
(35:26):
get from a buy sell side,basically, you know, inform a
seller on where the market is,then there's a higher likelihood
that you'll have transactions,that once we receive, you know,
some stabilization, from a rateperspective, we're going to have
a little, maybe this pricediscovery mode will become a
(35:46):
little bit clearer. And we'regoing to be able to have a
little more certainty in ourunderwriting, whether that's
interest rates, whether that'san exit cap rates, that
stabilization is a key. And whatI did see over the first week of
the year, is that Treasuries aredown from Monday to Monday,
they're down across the board,five, seven and 10. year
(36:07):
treasuries down, like anywherebetween 20 and 30 days are
pretty good and decrease in thefirst part of the year. So what
that means to me is that bondbuyers are looking at the
market, and they're saying, Hey,I'm looking five, 710 years out.
And I'm thinking that we're in abetter spot than we are today. I
do think that is providing mewith a little more confidence,
(36:30):
looking into my crystal ballthat I have, you know, really
you take my thoughts with agrain of salt, but I mean, it's
just like, I think the bondbuyers are at least saying that
they're they're seeing some sortof stabilization. That's a good
sign.
Mordecai Rosenberg (36:45):
Here, whenever you buy a property,
you're taking a gamble somemarket is going to perform on
where interest rates will be atthe time your loan matures, you
know, or when you have to sellthe asset. Yes, that's if you
raise money in a fund, if rentsare going to continue to
increase, there's three otheryears, there's things there's
(37:05):
risks that you're taking, attimes like this, where it feels
like the future is unknown,because like you don't know
where you see interest ratesmoving very, very quickly. I
know, I know the risks that I'musually getting into and a
stable market. I know, maybeI'll assume exit cap rates of
either flat or maybe up a point.
But if I see interest ratesrunning up fed being aggressive,
well now that maybe is a scarierprospect. Right. But as soon as
(37:29):
the Fed slows down, I feel likethat also calms people's minds a
bit. So even they're slowing youjust how much they the Fed was
raising rates that maybe gives alittle more peace of mind to
people. I was listening to apodcast recently with JP
Conklin, yawns, loan boss andpence furred. And he said that
(37:51):
when the Fed stopped raisingrates, Cap prices dropped by
50%. Within, like, a couple ofmonths, what's the basis for the
price of the cap? Well, one isthe expectation of future
interest rates when you thinkrates are going to be but the
second thing is volatility.
(38:11):
Right. And so if you're takingvolatility out of the equation,
all of a sudden, like theballoon deflates by by half.
Chase Johnson (38:18):
That makes a lot of sense.
Mordecai Rosenberg (38:21):
So we meet, you know, hopefully, we're
starting to see that incommercial real estate market as
well. On the debt side, there'sa lot of thought that we're
going to see a lot of gaps inrefinancing those shortfalls,
you know, that people who boughtyou know, when rates were at two
plus percent, or maybe theybought with a debt fund
underwritten at pro forma, andrealize that they're going to
(38:43):
when they hit low maturity,there's gonna be a shortfall.
Are you seeing any of that yet?
Or on the horizon?
Chase Johnson (38:50):
Yeah, I mean, we are seeing that we even if it
doesn't matter, if you hit yourbusiness plan perfectly on the
head, if you didn't dial in yourinterest rate, I mean, we look
at software and over the last 12months, it's increased to 400
basis points. So if you areunderwriting, you know, you go
from point zero 4% to 4%. Likein quick, and so no one really
(39:17):
underwrote that. And so I thinkthat you can even hit your
business plan perfectly on youknow, perfectly on point and
still be in a tough situation.
And so we're seeing the bigtrend that we're seeing there is
that you've got like I saidearlier in the podcast was LP
equities tightened up right nowthey're pinching, you know, for
the most part InstitutionalEquity is still pencils down I
(39:38):
think we're gonna have waybetter insight, you know, after
kind of MBA in February, maybeafter NMHC at the end of
January, but right now it seemslike they still are in kind of
wait and see mode. I kind oflook at that in them. And I'm
thinking if I'm a JV LPwhatever. Equity provider guy
say I was Happy getting 15 pluspercent on my money at in kind
(40:02):
of the when things were greatand I was competing at that
level. And then now I'm sayingwhat preferred equity and GAP
capital costs 14 15%. And Icouldn't be higher up in the
stack. And I don't have to be inthis first loss for this kind
of, I guess, not first loss, butalmost first loss position that
we're seeing this in real time,the transition from JB equity
(40:23):
prefered and say, Look, insteadof looking in, it's going and
trying to find new deals thatwork today, I'm gonna go find
old deals that don't work today.
And I'm going to provide thegap. So we are seeing a trend.
Mordecai Rosenberg (40:38):
So that's on the capital provider side,
right? They're saying that,yeah, we're going to switch from
LP to press. Are you seeing loanmaturities that are coming up
short? Or do you think it'sstill early? I mean, a lot of
those deals were done. And wewhat we were seeing was, they
would do these three plus oneplus one, if you did one of
those loans two years ago,you're still a year out even
(41:01):
from initial maturity, and youmay have two years of
extensions. So I don't know ifit's that stuff is actually
hitting yet or if it's stilldisbelief?
Chase Johnson (41:11):
Exactly, everything was pretty much done
on a three year initial term,maybe a two year initial term
with two one year extensions.
Those one year extensions,though, you got to remember that
they have requirements that theproperty, you know, operating
has the operations of theproperty within a certain level
to achieve that one, extension.
(41:32):
Good thing is I think most ofthe lenders in you know that did
these bridge loans don't want tobe property owners, they will
extend and pretend and in try toweather the storm with the
sponsor group. As long as you'vegot a good sponsor, it's doing
the right thing that is, youknow, in operations are on par
(41:52):
with what he presentedinitially, I think they probably
would bid, and they'll allow youthat extension, and I'm not
seeing right now, with the floodof distressed deals. I'm seeing
a flood of operators and equityproviders that are on the
sidelines looking for blood inthe water, and it's just really
not there like that. I don'tknow if that changes six months
(42:16):
from now, or what but you know,right now we are seeing a flood
of I mean, maybe, you know, atriple hit here and there, but
not, not with all the upgrades.
Mordecai Rosenberg (42:27):
Yeah, we'll see what happens. Yeah, I'm
trying to think back to like,2008-09. And there, you had a
serious crunch very quickly, andwhy that was, but there, I feel
like you had banks really pullout liquidity at all levels,
right. So like, you know, we asa lender, we're having our lines
pulled, right. And so if you'rehaving your lines pulled, now
(42:49):
you can extend your loan to yourclient, because your debt source
is wants their money back. It'sa it's a domino effect. Right.
So yeah, the mean, the repomarket, right, the overnight
lending market evaporated in,you know, in? Oh, 2008-09.
Right. So, is that lead dominothat affects everything else?
Most loans are doing prettywell. I mean, if you if you have
(43:11):
your lower rate, yeah, I mean,look, if you had a floating rate
and it ran up, okay, so maybeyou have some challenges, but
maybe it was IO. maybe therewere some room there. Okay, if
you've got a cap, all right, youhave a cap also. So like that
kicked in, you have caps. I alsoI mean, I get calls from people
who are interested in they wantto buy their distressed debt
(43:34):
buyers, like we want to buy yourdistressed loans. You know, it's
like, alright, easy there cowboyfor okay.
Chase Johnson (43:39):
Yeah, it's not I don't have just a ton of
distressed loans that I'm readyto sell for pennies on the
dollar. Yeah, it's yeah, it'sjust not there.
Mordecai Rosenberg (43:48):
Exactly.
Right. Plus, I feel like one ofthe the lessons that I think
people are more sensitive to therelationship these days, you
know, and you can't like tosell, you know, you have a
relationship with a client andthey trust you to make a loan.
You can't just sell the loan outfrom under them, to a Parana.
You know, that doesn't feel.
Exactly, yeah. So, just in ourlast few minutes, let's say if
(44:14):
you went back and spoke toyounger, Chase Johnson, when you
were first starting out, anyadvice you would give your
younger self words ofencouragement or advice,
anything? What would you whatwould you tell a younger version
of yourself?
Chase Johnson (44:28):
Gosh, I don't know. I would just, you know,
make sure to kind of hammer ithome. It's like, Look, man, do
like work hard. It's not youknow, nothing is easy. Nothing
worth anything is is easy. Andyou know, if it was that
everyone would be doing itwouldn't be worth anything.
Don't be afraid to work hard,and you know, work hard and do
(44:50):
the right thing. That's whatadvice I'd give.
Mordecai Rosenberg (44:52):
I think that's very true. I've also seen
to be fair, I've seen a lot ofpeople work very hard and still
fail because Whenever it justwasn't the right fit for them,
right? Was there a moment whenyou realized, oh, yeah, this is
something I could do.
Chase Johnson (45:08):
Yeah, I mean, early on, like I was, you know,
I got out of school, I was ananalyst for that small boutique
mortgage company. And, you know,I was making, you know, very
entry level type of salary. But,you know, you start looking
around and you start saying, oh,man, he just made X on that one
deal, or whatever, like, youstart looking and you can kind
(45:29):
of see the light. And and sothat was sofa, right? It was
okay, I wouldn't be How quickcan I get there? That's what
gets me up everything. What getsme up every day, is that ever,
no deal. No two deals are thesame. You are directly
incentivized by your production.
And you can, you've got thefreedom to kind of do what you
want within a certain range.
(45:51):
And, you know, there's no otherbusiness that I you know, I'm
not looking for anotherbusiness, but I'm just saying, I
haven't found anything thatmatches what commercial mortgage
making can provide someone withregards to flexibility, income,
and just general, you know,stimulation of your brain,
(46:12):
allowing you not to just feellike you're stuck in his
monotonous task, you know,hitting the same five keys every
day. You know, so it's just,it's, it's really been great. I
feel lucky to be, you know, tohave found it such a, you know,
as such an early part of mycareer. I mean, there's a lot of
people that had to work in adifferent industry for 10-15
(46:34):
years before they found whatthey feel like it's the right
Mordecai Rosenberg (46:38):
I like hanging out with technology fit.
people in tech, because you talkto them, and they have this,
this feeling that everything ispossible. It's like, yeah, you
want to build that? Sure, we cando that. You want to do that?
Sure, everything is possible. Ifind that brokers also, you
know, have that mindset of like,you know, even when times
(46:59):
there's always the optimism ofpossibility. You only takes one
lender that only takes That'sbrilliant. It only takes one
lender. Thank you for coming on.
And I love the the positivityand optimism. I think it's also
it's important for people to,especially in times like these
to surround yourself withoptimistic people, right?
(47:21):
Because that has a big impact,you know, so being on a team
with others who can energize youand even in your personal social
life, just surround yourselfwith positivity. Yeah. So thank
you Chase for being a source ofsunshine.
Chase Johnson (47:37):
Awesome. Well, I appreciate it. Thanks so much
for having me on today. And Ilook forward to seeing you
again.
Mordecai Rosenberg (47:44):
Awesome.
Thank you, Chase. I'll talk toyou soon. Bye bye.
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