Broadmark’s Ward maps growth strategy for mid-market borrowers

Brian Ward, the newly minted CEO of Seattle-based Broadmark Realty Capital, is outlining a vigorous growth strategy for the middle-market focused mortgage real estate investment trust.

“We aim to be a very aggressive, rapid response lender in that sub-$50 million space, which has traditionally been less efficient and yet now is flooded by capital looking for yield that doesn’t traditionally play in the space,” Ward says.

With the middle-market lending space seeing significant activity from relatively new entrants, Ward sees an opening for a more seasoned player to bring institutional expertise and a less leveraged balance sheet.

“Most mortgage REITs are levered at as much as $3 of debt to $1 of equity. And that type of leverage can be problematic, particularly in rising rate markets,” Ward says. “[Our low leverage level] gives Broadmark a ton dry powder to do some interesting things, particularly if we see market disruption.”

The REIT is not only prepared for major market disruptions – it is banking on them in today’s volatile geopolitical and economic environment.

“I can’t help but think as markets get more disrupted, as balance sheets get more pressure, because of rising rates and higher leverage amounts, that some of that capital is going to pull back,” Ward says. “I would like to think will open the field for the Broadmarks of the world.”

And Ward is already seeing signs of mounting market problems, particularly in the refi space.

“Whether or not this disruption is longer term or shorter term, I just don’t know. But, it’s already revealing itself a tiny bit. Deals can’t refinance because of rapid rate movements,” he says.

Broadmark will focus on short-term lending across asset classes and markets, so long as the loan amount is in its $5 million to $50 million sweet spot. Ward foresees a situation in which there is retrenchment in the middle-market space.

“That reduction in efficiency only gets worse as we see this disruption in the market, which again, sort of clears the field a little bit for us,” Ward says.

While Broadmark has focused mainly on construction financing so far, Ward wants the firm to evolve into a more all-purpose short-term lender that can quickly adapt to asset- and market-specific demands.

“I’m trying to get the business in a position where we can really scale it for future growth and be more effective across a broader range of investment strategies and less focused just on construction and more in these other sort of structured finance areas,” Ward says.

Most of all, Ward wants potential borrowers to see Broadmark as more than just another mid-market lender. “People should be thinking of us as a capital resource, really, across the entire capital stack,” he adds.