Ready Capital, a New York-based mortgage real estate investment trust, is gearing up to expand its conduit and construction lending platforms and bolster its partnerships with the addition of veteran capital markets specialists Richard Katzenstein and Alex Ovalle.
The hires signal a period of what Ready Capital hopes will be strong growth for a company that is seeing greater demand from borrowers for bespoke lending solutions, Adam Zausmer, chief credit officer, told Real Estate Capital USA.
Katzenstein joins the firm as head of strategic partnerships, coming on board from a senior role at Marcus & Millichap Capital Corp and a mandate to grow the firm’s strategic partnerships and loan sourcing channels.
Ovalle, national sales manager, comes on board from Mosaic Real Estate Partners to expand the firm’s existing structured fixed-rate and commercial mortgage-backed securities platforms. The duo will work alongside David Cohen, managing director and co-head of the REIT’s national bridge lending program.
“We will now have a three-pronged leadership model for our national sales team,” Zausmer said.
Conduit expansion
Ready Capital has been executing securitizations through its existing conduit platform since 2014, with six fixed-rate deals completed to date. These deals, however, are an alternative to traditional conduit-style CMBS.
“Our existing fixed-rate product has a flexible prepayment structure, so it is really a CMBS alternative,” Zausmer said. “We will continue to originate that product, which is for stabilized and light transitional assets. However, our CMBS product will be similar to the existing conduit market, which offers borrowers yield maintenance options for prepayments.”
The REIT believes a key differentiator as it rolls out its new conduit program will be its regular practice of retaining the b-piece of its CMBS deals and a focus on smaller loans.
“Because we retain the b-pieces on every securitization we execute, the kick-out risk is eliminated.” Zausmer added. “We will generally consider transactions from $2 million to $75 million.”
Katzenstein’s role is to expand the firm’s volume across all lending products, both through new strategic relationships and existing partnerships.
Origination goals
The REIT expects to originate about $3.5 billion of bridge loans in 2021, about 90 percent of which will be in the multifamily sector.
“We have been very successful in originating multifamily bridge loans where we control prepayment and exit fees. This gives us the unique ability to direct refinances to an agency takeout,” Zausmer said. “By controlling exit fees and prepayments, we have the ability to partner our clients to a strategic exit.”
Ready Capital is likely to execute on more than $5 billion of new originations this year, with Zausmer expecting that the development of new strategic partnerships and the REIT’s new hires will drive an active 2022. At this point in the cycle, Zausmer said he is not particularly worried about further credit erosion.
“As the pandemic unfolded, the market experienced delinquencies and collection issues. But we quickly saw a rebound ,” Zausmer said. “The market has performed better than we originally expected. Certainly, government stimulus was accretive, but as life is returning to normal, we don’t expect further material distress in 2022.”
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