[MUSIC] >> Welcome to the TREP Wire podcast. The show where commercial real estate meets data and insights. This is a special guest podcast. I'm Haley Keane with TREP, a data modeling and analytics firm for the CMVS commercial real estate and COLO markets. I'm with Lonnie Hendry, Chief Product Officer. Today, we're joined by Samir Tejpal, managing director and head of capital markets at Madison Realty Capital. In this role, Samir has led the firm's expansion into capital markets and private credit products, while forging relationships with institutional investors globally. Samir brings extensive expertise in debt and equity structuring, capital raising and institutional relationship management. His deep understanding of the commercial real estate finance landscape spans whole-own origination, CMVS distribution and alternative lending strategies. Currently serving as chair of the alternative lenders and high yield investors forum for the CRE Finance Council. Samir is recognized as a thought leader in the industry. Actually, that's where we found you, Samir, on a panel at the CREP C conference this past June. So, Samir, thank you for joining us today and welcome to the show. >> Pleasure to be here, Haley. Thanks for having me and Lonnie. Thanks for having me as well. >> Yeah, we're so excited to get into your role specifically at Madison. But also, I'd love to have our listeners just learn from you. How did you find yourself in commercial real estate and where is your background? >> Sure, no problem. So I got my career started at what I think is a fairly similar time to where we are today in the market. The graduate of Georgetown University, I entered at Deutsche Bank in the summer of 2011. For those of you that know what happened in the summer of 2011, there was a downgrade of the US, the US's credit. We were on the tail end of what was the global financial crisis. There was a lot of optimism towards where the market was going. But we were still kind of finding a bumpy road before some stabilization. And I was very fortunate. I joined Deutsche Bank full time in 2012. And the Originations team joined a business that at the time was doing all things commercial real estate lending, both securities and balance sheet. And we rode that wave very well. We were the number one CNBS dealer for five years in a row. I got to work on hundreds of not thousands of transactions, at least on the underwriting side of it. Closed a number of them as well. And really was a terrific way to get my career started. And from there, I pivoted. I went to the Trading Desk at Deutsche Bank in 2015. Learned what I described as the other side of the business. And then from there, in 2018, I left to join a different private credit shop. I was there for six years ahead of capital markets there on the debt side. And then managed our specialty finance on the equity side. Did fundraising, managed the Originations, innovated new products. And it's been a terrific 13 year career so far. I was able to join Madison last April of 2024. So I've been here for about a little under a year and a half. And it's truly special to see what we've become over 20 years with the guidance of Brian and Josh, who are the co-founders. And I'm excited about where we go. And hopefully this conversation is insightful. Yeah, that was a great introduction. And then really cool to kind of hear the similarities between when you started in 2011 and kind of where we are now. So I guess before we get into the nitty-gritty here, do you have some advice for people that are maybe just starting out right now? Where the market's a little bit uncertain, maybe deal flows down. There's some challenges, macro challenges that you as an individual contributor can't impact directly. What did you learn coming out in 2011 that you might be able to share with people that are entering the workforce in the CRE market today? Two of the main benefits I got coming out of college and going to Deutsche Bank were one just diversity of products available to us at the time. And I think anybody who's getting their career started now or looking to move on to a different opportunity, really having the ability to participate in many, many different ways is a huge differentiator. Particularly at a time where, depending on what you speak to, the outlook is either super positive or super bleak. But if you have the products, particularly in credit, to provide different sorts of loans, whether it's development, bridge, fixed rate, recap, et cetera, you just have a higher propensity and opportunity to see deal flow, close deals, and become more relevant. And then the second piece of it is, I just like to describe it as a winner's mentality. Everywhere I've worked in my career, I've worked for folks that want to win, want to do right by their clients, want to be relevant, want to think outside the box. The number one thing that attracted me to Madison was a business that started 20 years ago. And today is a business that continues to want to push it forward across every product we create, whether we've had it or we want to build it. And it's a very collaborative entrepreneurial culture. And I think those two things are really important for anybody starting their career right now. Yeah, I think that's great insight. And I would agree with you. I look for people that are ambitious, entrepreneurial, gold driven, willing to put in the work. And I think in downturns, like you're seeing, let's come out of maybe at this point, it really shows you who's got that fortitude to kind of make it when things are good. If you can make the calls, create the network and do all that stuff now, business will be better for you significantly when the market turns. So just in terms of market shifts, I mean, we joke on our podcast that the last five years, sometimes feels like you've lived through about 25 years 'cause you had COVID, you had the stimulus money that got pumped into the market, which just led to all kinds of lending activity. Then you had the Fed with a rate hike cycle. And then now you have tariffs and you're uncertainty created by that. The benefit is that commercial real estate has proven its resiliency. But for someone that's sitting in your seat that's doing what you're doing day to day, how has the landscape really shifted? And where do you think we are today, maybe compared to some of those COVID or the rate hike cycle, et cetera? - So I'll rewind the tape. As I said, 2011 was a year where we were getting to the point of the upswing. 2012 we were firmly in the upswing. A lot of transaction activity. Most of that was in the perm side. So fixed rate lending. And then as we matured a little bit, value creation and opportunistic came into play a bit more. So 14, 15, 16, 17, 18. Then the market started to mature. 18, 19 folks felt like we were 10 years past, what was the GFC? Hey, it was the recession around the corner. We're not seeing a lot of growth, et cetera, et cetera. Then COVID breaks and you have this massive divergence in the market. And it's really a tale of two experiences. The first being the market's frozen with a very quick stimulus move by the, you know, the Fed, the Treasury and the government. And that relates to base rates going to zero and ironically, credit spreads going to zero, which you look back and you're saying yourself, that doesn't really make much sense. And then you fast forward a little bit further about a year later to your point about it feels like 25 years and five years. And what does the market do? Because the exact opposite way in 2022, base rates go from 10 basis points to 500 plus basis points and credit spreads widen too. So in the span of two years, the market basically diverged as sharply and quickly as you possibly could imagine. And where we are today is, I feel like we're that three years forward period after our GFC in some ways. And what does that mean? You know, 23 was very slow. You can just point to investment sales markets to show you that and transaction activity and financing activity. 24 was a better year, but still sensitive to not a lot of fixed rate borrowing because folks wanted to have that optionality to see what the Fed, the Treasury and the government were going to do with short term rates. Coming into 25, there's a lot of market exuberance. There's obviously a new president. There's outlook on what our economy will and can be in the future. And we're now six months in or seven months into a new presidency with some of that tariff noise behind us. And I find myself thinking that we're somewhere in 2011, going into 2012. So 26 could be a great year for us. And I think you'll start to see that mostly on the fixed rate borrowing side. And we're starting to see that as base rates come in. You're starting to see some 5% plus or minus fixed rate coupons. But even more exciting, particularly to our businesses, where value creation lenders, whether it's construction or acquisition or transitional bridge with cash flow, we're starting to see more investments in our activity. We're starting to see more ground breaking because-- and this is something I'll go into a little bit more in our discussion-- we identify supply and demand and balances with our business. You've got to go to markets where supply, far underestimates what demand is at the time or where we'll be in the future. And because the last two or three years have been so shallow in terms of transaction activity and construction, we're seeing a number of markets today where there is under the radar investments sale activity or development activity that's going to bear fruit two or three years from now. So that's kind of my connecting the dots over my career and why I feel so bullish about 26. Yeah, I share the sentiment. I think 20, 25 has actually been a really solid turning point where all of the noise, even the tariff stuff, as you mentioned, we've kind of dealt with that. I mean, obviously, on Liberation Day, the market's kind of froze there for about 30 days. But beyond that, it seems like CEOs and others in the market have said, we're going to just push through this. And the optimism around 26, I think, is very real. The transaction market, I even read some stuff this weekend around San Francisco office with a positive spin. So it's like some of these things that over the last couple of years, you couldn't get a positive read at all. They're starting to be some green shoots sprout up. So I'm excited to hear about that. You talked a little bit about your guys' business being opportunistic and looking for supply and demand and balances and having to find things under the radar. Give me some perspective on that. I mean, there are specific sectors or there are geographies across the US. Where are you seeing some of those opportunities pop up today? I think it starts first to foremost with demographic trends. So we've seen in the last five years, we've been dating back 10 years. There's been a thematic shift. And that shift was into the southeast, southwest, and parts of Texas. And now we're seeing a shift back into the mid-Atlantic, midwest, and the coastal cities of the Northeast and Northwest. And the irony is around that, as capital moved away from the coastal cities and the Northeast and Northwest and went to the southeast and southwest, there was still a lot of population demand. You think you're like a city like New York. Young professionals are constantly moving into the city. Folks are relocating constantly into the city. And at the end of the day, there's a meaningful shortage of housing in comparison to the new entrance to the market, whether they're professional students, employers. And for us, again, you think about cities like Atlanta, Charlotte, Nashville, Tampa, Miami, Dallas, Houston, and Austin, huge beneficiaries over the last seven to 10 years. But as supply now has kind of exceeded demand, there's the recalibration where we elect to put capital to work in those cities is in markets or asset classes where there hasn't been as much supply. So for example, a transaction we're closing right now in Charlotte. It's not a multifamily ground up construction opportunity. It's a single family home and town home development opportunity. One might say, that's the same thing. It's housing oriented real estate. Well, a little bit different. Demographic trends show you that folks as they get into the late 20s and early 30s, they would prefer to live in a home with a garage and have that sense of home ownership. I'll be the day they don't own it. It's a little bit stickier of a tenant base. And that tenant base also was willing to pay a little bit more. And as you feel back down here and further, you'll find that in a lot of these southeastern and southwestern markets, zoning entitlements for single family home and built to rent are much more difficult than multifamily. So where we express our desire to be in rezzy lending, we choose to express that based on our skill set and our business acumen. So I hopefully that Charlotte example is more indicative of how we express it. I'll come back to one thing you said earlier. It's not necessarily an opportunistic perspective. It's more of a realistic perspective. I just describe it as we see where trends are going. Give you a different example, New York City. Five, six years ago, it seemed to be that hospitality keys in the city, far exceeded or maybe over exceeded demand coming from foreign tourism, domestic tourism, and business travel. We're five or six years forward now, 2025. I read more and more about an under supplier shortage of hotel keys in New York City. So how do we express that investment thesis? We have a terrific partnership on the hotel lending side. We are active hotel lenders. And in New York City, it's a supply and demand imbalance. When you have folks that want to buy hotels or refurbish hotels, wildly in the favor of those folks that are willing to put capital to work because of that supply and demand imbalance. So we try and think about it in all asset classes. And the last thing I would say is, when you're a lender, you're trying to earn clients a business. There are a lot of markets when the market's really hot and doing extraordinarily well. You will never be able to earn a client's business. When the tides pull back, when things get a little shaky and the clouds start to come in and rain on the parade, those borrowers don't have as much attention on them. And in many ways, that might be the perfect time to go approach a market, a client, or an investment thesis. Because, as we talked about, things eventually will recycle back into a market that does have more positive tailwinds. So you think about San Francisco, you noted that. Class A plus office in San Francisco, I would imagine is doing extraordinarily well. That's going to spill over in class A and A minus and potentially into B plus. I don't know if that happens. You're from now or three years from now. But if we can go into a market like San Francisco or Washington, D.C., or Chicago, and make a relationship to a client, that is willing to put money to work in development or in acquisition, you're going to earn that client's business for the next five to 10 years. And that's really the way we've built our brand is very client focused, customized, and really being a part of every aspect of the life cycle in their real estate investment. Yeah, I think that's both great examples on the single family stuff. I mean, we've talked to a lot of people and we've seen that in the data. There definitely is a propensity for renters to prefer being in a house, even if they don't own it versus a traditional apartment complex. And so in markets where you can make that work, the demographic data definitely supports the thesis there. And so it'll be interesting to see, I think we're going to see a proliferation of that over the next five years into other markets. But markets like Charlotte and others have kind of been a little bit ahead of the curve from your guys' perspective, where you can get in there now. There's good demand, maybe not a huge amount of supply and some really good opportunity. I like the San Francisco, Chicago stuff. I mean, look, to your point, it comes back to the fundamentals at some level, right? And then the market by definition, we talk about this a lot in our show. You know, the first couple of things you learn in real estate when you're taking classes as an undergraduate is that real estate by definition is cyclical. And the other thing is that real estate is a local and sometimes hyper-local endeavor. You could have two buildings on the same street with completely different outcomes, based on the ownership, the operations group, the capital stack, how things are situated. And for you guys to be able to use that information and make informed decisions and really take advantage of that while putting the client first. I mean, sounds really appealing. And I think is why you guys have had such great success. And I know why you're so excited to be part of Madison at this point. I mean, you've, as you mentioned in the intro, had a lot of experience in the market. But I think your guys has kind of custom tailored solution, client focus really separates you in the marketplace. And so, you know, give me some perspective on the private credit. I mean, you can't go anywhere in the US today, pick up a newspaper, read an online article and not hear about the private credit space. You know, give me some perspective on that from where you said. - Absolutely. So we know private credits here. We know it's here to stay. We know it's here to grow. We know it's going to take market share. We've taken all of that in. And the way we've kind of expressed our desire to participate is obviously in our value creation lending where we're the direct lender to a borrower that's taking on a business plan. But, you know, the other aspect is lender finance. So with the advent of more private credit and private capital flowing into the space, almost every one of those private credit lenders needs some sort of leverage attached to their investment. Now, that expresses itself in sublines, in math lines, in repo lines, in one off, no, no, no, finance things, in participations, in anodes and mortgages. We see just a huge opportunity there. And if the market doubles in the next five years, there's an opportunity to provide that lender finance to those counterparties. And if the market doubles, lender finance should double if not triple in size, particularly when you think about interest rates coming back in the equilibrium. It's very easy to make a eight to 10% return with sovers at five. That's something we all forget. What it was like three or four years ago when sover was 10 basis points. But when base rates come down in credit spreads sort of compress, folks need to take on more financial leverage. That means higher advanced rates, whether you're buying securities and levering those or you're doing hold-ons. So we have a very large business here that specifically focuses on lender finance. And we try and tackle it from that same sort of mentality, customize finance solution. You want to do a mortgage-mes execution. You want to do note on note. You want to split a deal vertically in period pursuit format. You want to provide your warehouse. We're game. And I think in a market that has been shallow for the last two years between transaction activity, there are ways where you and your colleagues or counterparts can all enjoy in the deal just at various components of the capital stack. So we'll get our wins as a direct lender. Our business has been around for 20 years. We'll be around for another 20 plus years. And we'll continue to grow and take market share against the comp set. But I'm as bullish about alongside Brian Josh and the rest of the partnership here about expanding our lender finance business, which had historically been reserved for banks and life insurance companies. But more and more, you're seeing private credit come into the space, different forms and formats of insurance capital come into the space, money management capital coming into the space. And I think that's really bullish. And we are very bullish about that opportunity. Yeah, I think it's great to hear you guys are leaning into that. Because I think it's from our perspective, we obviously track a pretty wide swath of the marketplace. I mean, we're written into the CNBS deal structures. We have all the bridge financing that gets securitized with the CRE CLOs, all the agency stuff. So there's a lot of transparency around that marketplace. The private credit market is a lot more opaque. And then, you know, as you just outline, there's a hundred different ways you can slice and dice that opportunity, which is great. It's financial engineering at its finest, but it does provide a lifeline and it provides opportunity maybe when some of those more traditional paths aren't available. And so it's great to see you guys are like going into that. And I think the market needs it. And I think that's one clear differentiation between the GFC and where we're at today. It's like there wasn't quite the sophisticated private credit markets back then that there are now. So we haven't seen a lot of the properties go full default. We haven't seen, you know, bargain basement prices at scale because people have been able to leverage their internal expertise, their operational expertise. And to your point, find opportunities where maybe there's an imbalance. There's just a bad operator, but it's a good property. It's a good market and provide rescue capital and provide other things to keep those things solvent. It's interesting to see how that plays out. And it's great to hear your take because I think if you were to say that you guys are, you know, thinking that's a fat or it's gonna go away or not gonna double down, like I would say that's probably short-sighted because I think the market's gonna become more and more competitive as more availability of capital becomes, you know, embedded into the space. And so you mentioned a little bit the rates. And let's go back to that briefly. You know, I've been in the business 20 plus years and, you know, when we were at zero interest rates or the federal fund rate was at zero and people were borrowing money for free, it's like, we had five years of syrup and everyone thinks that's what's reality. And now what we're calling this like higher for longer markets, you're saying now, like you can get some deals in five low sixes. Historically, that's like, that's what it is. Like that's a good interest rate. If you can lock in a 10-year term if I haven't a half percent, like 10 years ago, you would have done that every day and thought you were stealing something, you know, and now it's like, oh my goodness, rates are so high. You know, have you seen borrower behavior kind of come back to reality around rates and say, like this isn't terrible? Or are they still kind of hoping and dreaming for a return to this, like, you know, zero percent interest rate phenomenon that we had? - I think the market three years forward is one of acquiescence to where we are, raising capital for equity investing continues to be very challenged. I don't pay attention necessarily to the mega headlines about this firm raised 20 billion and that firm raised 40 billion and that guy did 10 billion. The market is not just built off of those mega funds, it's built off of the regional and super regional players, the local mom and pops. It's still challenging, but the mentality is back to where I think it had been pre-COVID, which is I make an investment as an equity investor and my horizon is 10 years. It used to be a 10 year DCF, run the 10 year DCF and see if the investment thesis based on our growth rates and our expensive assumptions spits out what we would describe good, relative value or risk reward. And that just changed after COVID. We went from a 10 year horizon to a five year horizon, to a three year horizon to a two year horizon and the market's back to needing to be a five to 10 year horizon. And I think that's a good thing. So from my vantage point, we're value creation lenders. I do pre-dev loans, I do acquisition land loans, I do ground on construction loans, I do inventory loans. I want to be alongside that loan for anywhere from two to seven years. One of the best words of advice I got from senior manager in mind as I started my career is touch the loan as many times as you can. That's how you build a relationship, that's how you build a friendship. So what does that mean? You provide the client, the acquisition of the land. You provide the client, the pre-dev loan. You provide the client, the vertical construction loan, and you provide the client, the bridge loan. You do the mini-perm, you're lucky, but more than likely they're gonna want to either sell it or do the fixed rate loan. I touched on the bank I worked for at the beginning of my career, we tried to provide everything in that two to seven year horizon. There was a reason why we were so successful. It was the same way the firm I went to in 2018, and it's absolutely the same way we're here at Madison. That's the way you earn business and earn a client, and it's in line with what I just said, it seems like you and I agree with, which is base rates went wildly down, wildly up, and they've kind of just been maybe fluctuating here for the last three years. I don't think we're far away from equilibrium. I think a plus or minus five percent interest rate environment is a very healthy interest rate environment. And as long as we're within a hundred basis points of that up or down, I think we can make markets, investment sales will happen, and you'll see a lot more development. So I'm optimistic. - Yeah, I think we're fully aligned there, and I think that's really optimism for 26 comes in. I think people are getting to a point where they have some confidence that rates are kind of anchored, where they are plus or minus a little bit, but it's where they can get deals done. And I think if you see some fed rate cut activity, the latter half of this year, that's just gonna accelerate some of that optimism into 2026. And so you talked about all the different types of loans that you do. One thing you didn't talk about, but you guys have been benefiting from the headlines of the $720 million loan that you guys did for Pfizer headquarters in Midtown as a conversion project. So give me some color on that deal in particular, and maybe some broad perspective around, is this something that can play out where you see more conversions? Is this something where it really is gonna be a handful of these really big buildings or these just right opportunities? Or is this something that maybe has legs? If you get four or five of these done right, where people then start to buy into the hype that you can convert some of these old dilapidated functionally obsolete offices into housing. - Great segue. I'll touch on New York first, and then I'll explain how I see it expanding nationwide. So conversion of office to multi or REZI for sale is been going on for 15, 20 years. It's not a new phenomenon, but post-COVID, clearly there was a reset evaluation of office, take office in New York, clearly a reset, and investors and developers, those were the expertise in doing it, executed that business plan. So they bought it at a basis that was more compelling. They layered in the costs, the hard soft and carry costs to convert, and they recognized that they're delivering much needed rental housing in a supply-constrained market in Manhattan and the other boroughs, not rocket science, but the numbers worked. When you layered into what has happened now with the 467M tax evapment in New York City, you are then incentivizing even more conversion opportunities. And the question is why? Well, you're bringing a whole new swath of capital into a market to convert old office into housing. You're bringing a whole new generation of converters and entrepreneurial commercial real estate investors that are gonna think about transactions from five million to 500 million to five billion. So there's gonna be a whole new world of new guard office to multi converters. Now they've got the benefit of lower basis in the office they're buying. They're gonna have the benefit of more efficient financing because the market is accepted that office to multi needs to be completed and can be completed. And then number three, you're delivering housing into a supply-constrained market. So it really should be a win, win, win. And the 467M abatement really solidifies that as an ongoing investment thesis in New York City. Pfizer is the perfect example of that. Josh and our team cut through that extraordinarily fast and saying like, here's our basis, here's our business plan. We've got the pre-eminent converter in New York City over the last 15 to 20 years who's committed to the transaction in excellent location with less than 2% vacancy. And clear line of sight in getting this building converted. And then it just becomes a question of do you have the capital and can you move quickly? And are you willing to write a 720 million dollar check? And Madison certainly is not shy about sticking behind its conviction and getting a transaction done. I think that speaks for itself and speaks for our brand. It is gonna be a wildly successful project. And when you think about Pfizer in a moment in time, there's probably gonna be two or three more Pfizer's in the market over the next 12 to 18 months. It won't be the largest deal for forever. There will be a larger deal against converted. It may not be the largest deal by unit count that ever gets done. But clearly the stars aligned for us to build the conviction, to have the right counterparty, to deliver the right product at the right moment in time. And we want to continue to do that. So we're very much open for business to provide capital to investors that want to execute a conversion mentality. So that's the New York perspective and that's the Pfizer perspective. When you think about taking that nationwide, what are the differences and what are the similarities? The similarities are folks can buy office at compelling basis. In transit value of those office buildings, the physical quality TBD, but there are certainly major cities that have similar qualities as New York. What those cities lack though on paper is depth of counter parties that can execute the business plan. There's only so many folks like Nathan Brewerman, David Werner, that can execute a business plan. That's capital and execution capabilities alongside their team. It hasn't been done in a lot of other markets. Hasn't been done in scale, or it hasn't been done in the breadth of number of deals. But it's starting to happen. You're hearing about it more and more. And then the other thing that kind of is a little bit more shallow when you get outside of New York is you don't have a 467M tax abatement. I think that's gonna change. And I think as local municipalities and thought leadership embrace it, they're gonna understand it's a win-win win for much needed housing, for taking deficient office stock offline and number three creating tax revenue. What those other cities supplement versus 467M and you're hearing about this a lot more now as historic tax credits. It might be a different way these locations and municipalities express that sort of incentive. So I know in DC and parts of Virginia and Georgia and other parts of the country, historic tax credits are available for investors that wanna convert not necessarily historic landmark buildings, but historic buildings that qualify for historic tax credits. And thus tax credits can be used in place of common equity. Now, the stars are gonna align. You're buying the building for the right basis. You can find the lender to provide you the capital. You've got the business plan and the business acumen. And then you have the right incentive attached behind it. Rarely bullish on the opportunity set. And we are most focused in major markets. DC, San Francisco, Los Angeles, Miami, LA, Washington, DC, Boston, but who's to say can't go into the top 25 markets? So I think in explaining and answering your question, it hits a lot of what Madison's all about. Starts with our investment team, Brian and Josh having conviction, seeing the supply and demand imbalance, finding the right clients, thinking life cycle. And then expressing that thesis. So Pfizer is just a culmination of that, but it won't be the last deal we do. - It's a great headline and it's a great story in the sense that you have to have conviction to make a $700 million plus loan on a conversion, even with all the stars aligning and even with the right group. That's not something you take lighthearted and you guys have really pushed into that. And I agree with you. I think the public-private partnership is a part of the equation that gets maybe less credit or less headlines than it should in the sense that the abatements and other things can really change investor behavior for the positive. And when you have something like this, like in San Francisco as an example, in California has Prop 13. So they have limitations on what they can do to property values, once values are reset. So you buy an office building today at 20 cents on the dollar, it's gonna get reassessed at that new assessment and it's gonna get a 2% increase annually in the perpetuity. You're never gonna get that texture of a new back. If you incentivize some of these conversions, it's gonna create opportunity for the municipalities to see the upside of that in or to provide affordable housing or just more housing in markets that are housing deprived. And so I'm optimistic here. I've actually changed my tune a little bit on this. I think when the headlines first came out around Office to Rezi conversion, I immediately said, well, there's no way this will work at scale. And I still think it probably is not something that you're gonna see hundreds of buildings and even the major markets, but I think it doesn't have to be. If you could get 15 or 20 anchor projects across the top 10 or 15 MSAs, I think that's successful. And I think we're well on our way of seeing that play out. And this is a really great example. If you guys are with them and they deliver on this and it garners the type of publicity that it should, I think this acts as an accelerant even way beyond COVID. I mean, I think this just shows people that this is a viable alternative. And to your point, people have been doing this for some time. It just never got the headlines that it does today. And so, which is another interesting dynamic. I mean, you guys have gotten really good at managing social media and getting yourselves out there and exposure and all of that stuff. I mean, from when you started out in 2011 to now, like obviously in 2011, like social media didn't exist in its current form, what has that meant to you guys as business, like getting yourselves out there, getting, you know, published on Twitter and LinkedIn and traded and all these other places where you guys are getting that publicity. Does that create more opportunities for that relationship that you talked about earlier, beyond just the actual numbers and the bricks and sticks? - Kudos to Raff, Brian Josh Adam. You know, the brand has come a long way in 20 years. I think we're continuing to get better. Our presence externally continues to evolve. You know, five, 10 years ago, folks may have thought of us as a coastal lender. Five years ago, folks may have thought of us as an opportunistic lender. Three years ago, folks may have thought about us as they primarily do construction lending. But I think where we're at 2025, very confident. We can provide any loan from a value creation perspective against any counterparty or competitor. And that's something we want to get out there. And social media allows us to do that. We're relevant and we're transactional and we're long-term oriented. And folks shouldn't know what we're up to. And I think we're just scratching the surface. Social media, we feel is a tool for us to expand our brand. We're not a trillion dollar manager. We're 20 plus going to 25 billion dollar manager. And if it's a way for us to win the attention of a talented young professional, if it's a way to win the attention of a counterparty or a barber in a market we've never interacted with, we're going to use that. If it's a way for us to use social media to grab the attention of a prospective investor or a financing counterparty, certainly goes to a benefit of our brand. I think we use it in a growth mode, in a brand mode, in the expansion of our capabilities mode. And it's been a huge, huge boon for us. Going back to where we were 15 years ago. I mean, those were the days where some of the other, I call them like OG online publications, like the real deal. We're just cutting their teeth. It's amazing what they've built. It's amazing what commercial observers built. But it's not uncommon now. I go in Bloomberg. And a real estate headlines in the top five stories. That's terrific. You know, Pfizer is a top five headline. That's terrific. We're competing for that attention, and we're going to continue to do it. And I think you have to have that to be successful now. Clearly, it diverges, and there's consolidation. So the bigger managers are becoming bigger, and the smaller managers are becoming more niche. Yeah, and it's interesting for us. Like we obviously talked about the Pfizer story on our podcast. But we're seeing, you know, you've seen John Grey of Blackstone and others really embrace the social media stuff. Like if at that level of corporate exec is like seeing the benefits of having a social media strategy, I think for all of us that are downstream of that, we're all challenged at this point and not do it. I mean, our team does a great job. I mean, Hayley and her team do a great job. We definitely outpunch our weight class here in terms of brand awareness. And we're very active on the social channel. So I guess as we kind of round out here, let's circle back to office, maybe more in a traditional construct. So we talked a little bit about the conversion. We've seen a significant uptick in our data on office issuance in 2025. So just for some round numbers here, total origination in the CNBS markets in 2023 in the office was 4.3 billion. 2024, it was about double, 8.7 billion. But year to date in 2025, we're up over 15 billion. Just to give some historical context, it's been around 20 to 30 billion. It would be like the running 10 year average if you remove the last three or four years. So we're not going to get there probably maybe 25 billion. I guess if we annualize that, what are your thoughts on that? I mean, are we seeing office come back as a viable investment sector for nonconversion? Just for like, you know, continued use as an office. Maybe even continued use as a class B office. What are you seeing and what are your thoughts on that? Come back to two things I touched on. Supply and demand and balances. Can always river back to the mean. And you've talked about hospitality in New York and how there's been this runoff and keys. It's created that imbalance. You're going to start seeing a runoff in office and it's going to boo even market to A plus plus untouchable in a good way for landlords. A plus untouchable but achievable. A achievable, A minus and so forth and so on. I think 26 will probably be a peak year for office refi. I truly do. I think 26 will be a great year for CNBS. But I will caution CNBS markets are not indicative of what's really happening in marketplace. There is a tremendous amount of unlocked or uncourt struggle with office in special servicing in bank portfolios and life-code portfolios and private credit portfolios. I still think the market's trying to figure out what would somebody buy office for on a Yoldon cost basis, what the costs are to retinent that space. And they're still outside of the A plus plus, you know, trophy fortress, what's the market for opportunistic or core plus equity in office space. So again, Lonnie, we talked about real estate to tenure horizon business. Office is certainly a tenure horizon business. So I'm optimistic, I think transaction activity will pick up, but it's got to be for a tenure horizon kind of lens. And the last thing is we're not seeing office construction starts. I don't see many cranes in many markets these days where they're building office. I think that'll change next year. And that'll be a good thing. Yeah, we're definitely seeing some construction down here in Dallas. And I make a joke when I do presentations that checks this obviously is not seen any form of a recession. And in fact, there's so much construction that they've changed the state bird to the construction crane. And so there's a lot of activity here, even office. I mean, the uptown Dallas market, you're seeing a bunch of activity there. And to your point on the CNBS side, you know, of that 15 plus billion, you know, 90% of that has been the trophy class A, single asset, single borrower deals that maybe is not reflective of some of these smaller, more regional type of offerings. I did have one more question. I would do this every time. Haley's like, okay, every time he says we're done, he has more questions. I love these kinds of, yeah. The question is, and it's kind of a hybrid between, you know, stabilized office and conversion. Have you seen an increase in interest where people maybe come in looking at converting an office, but then when they run the numbers, if they can get the acquisition basis down to a point that's good enough, they could actually operate the office at 60% occupancy and actually have a better ROI than taking on all of the risk and all of the headaches of operations to convert. Like, I think there's probably an emerging, this is just my anecdotal thought, but I think in some of these strong markets, you're gonna see people buy Class B office without the intent to convert them, to basically just operate them as a Class B, but the basis is so attractive, it makes sense. - In generate a healthy cash on cash, even though it's a 60% occupant. So, I'm gonna come back to the answer I said a little while ago. The cost difference of what somebody's willing to pay for a stabilized Class A trophy office building and what somebody's willing to pay an earn for a Class B 60% occupied office building is still being determined. Now, let's assume that the seven-year-old loan cost versus a 10-year-old loan cost, right? To go out and buy that 10-year-old loan cost, the reason partly you're doing that is, you need to earn more because it's more risk, but also your cost to capital from a lender is much lower leverage and it's much more expensive. I think that loan coupon is probably 200 plus basis points more. We don't have privity and price discovery there to say that buying Class B office at 60% occupied is an investment thesis and an investment trend. But what we are seeing and we have under office deals for conversion is it doesn't need to be office to just resi in the sense of rental. It can be office to student. - Yeah. - It can be office to hotel. It can be office to for sale. And then you start thinking about could it be all four? Could it be two of the four or three of the four? Again, we need a market just like you do one in debt or an equity, a competitive market, competition drives terms. It makes it more efficient and that's when you're gonna start to see better price discovery. The bid-ask is just a little bit too big right now from my vantage point in that Class B thesis you're talking about. - Yeah, it's great insight. I think it's still early for that, but and I may be wrong but it feels like maybe in 26, some of those kind of cuspier fringe deals you might start seeing trade with the expectation of maintaining that B office for the cash on cash. But it'll be interesting to see, I love it. I mean, we're at least having a discussion now. It used to be you couldn't even mention office without having 10 years of ad luck. And so now we can talk about office freely and that's good. So yeah, this has been really, really great. So I appreciate your insights and great expertise, great insight and very, very appreciative to have you join us today. - So Samir, thank you so much for joining us today. This has been awesome. I know Lonnie and I can feel your energy through the video right now, but I know our listeners are going to hear that when they hear this recording. Just for some behind the scenes for our listeners, we always tell our guests, oh, don't worry, we'll be able to edit this podcast if you make any mistakes or you have anything you want to add. Samir, I do not think we're gonna have anything to edit today. So thank you so much. This has been super insightful. I mean, your takes on the market are just very thoughtful. So this has been awesome. Before we close here, I want to just give you a chance to let our listeners know how can they find you, how can they find Madison Realty Capital and learn more about what you guys do? - Sure, no problem. So I guess to wrap up on my end, we have a terrific TV here in Madison. We're gonna continue to be active in the markets. We appreciate these opportunities to partner with Shreb. You guys have been great. We can find us at MadisonRealtyCapital.com. We're active across the country. We can provide you, as I said, alone or an investment opportunity. Pretty much any sort of business plan. Our loan size is called 20 plus million all the way up to a billion plus. And we are very eager to get to know you as a prospective client and find ways of working together. So I really appreciate the opportunity. And I look forward to hopefully participating in the future. - Awesome. Well, thank you so much, Samir. This has been great. Thanks, Lonnie, for all the insightful questions, as always. And with that, we'll close this special podcast. Thank you, Samir, for joining us today. Join us later this week as we look at what's happened during the week and how it may be impacting you. If you have a question or a comment, send an email to
[email protected]. Until then, visit trep.com for more info and subscribe to the TrepWire podcast with your favorite provider. Thank you for listening and stay well. - All right.
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