Vancouver-based Trez Capital is preparing to expand its commercial real estate investment and investor platforms, naming John Creswell to head global capital raising efforts at a time when more institutional and private investors are looking favorably at real estate debt.
The firm, an active commercial real estate lender and investor for 25 years, is seeing rising interest from global investors that want exposure to real estate debt and equity, Creswell said. It focuses on multifamily, self-storage, industrial and some retail and lodging. Trez Capital has a substantial number of verticals within residential, including single family for sale and lot development, he added.
“Many of our investors are in Canada, but we have seen increased interest from investors in the US, Europe and the Middle East,” Creswell said. “We are not going to take our eye off Canada, where we have a wonderful heritage. But we will be expanding our funds globally and we will be offering more closed- and open-ended funds in the US and in the Middle East because we are seeing demand grow for what we do.”
Creswell, who most recently filled a similar role at Duff & Phelps Investment Management Company, said Trez Capital is in a position where it sees room to expand its commercial real estate lending platform. Even before the recent pullback from banks, the firm has been building strong relationships with developers in Canada and the US.
“We found our borrowers and development partners felt loyal to us, even if the rates were comparable in the market, they would choose us because they thought we’d move quickly and understood their business. We would also understand if there were any issues and were generally more flexible during construction projects,” Creswell said. “This meant there was a high percentage of repeat borrowers. Additionally, our existing borrowers are referring others and that has meant the pipeline of deals we want to fund is growing.”
Trez Capital began to open offices in the US more than 10 years ago. The firm has a roughly 30-person team in Dallas, with additional offices across the West and footholds in Miami and New York. The firm makes short- to mid-term loans in higher growth markets from Scottsdale to Charlotte and, because of where it has focused its lending and investment, has been largely insulated from the turmoil seen today.
“I think the recent turmoil in the banks has accelerated a trend we already felt, which is we were a non-bank lender option which was easier to use and more flexible,” Creswell added. “The banks are pulling back, and we are seeing it.”
The firm has multiple global distribution channels, including institutional, retail and private wealth. These investors are interested in real estate and real assets.
“We are seeing bigger allocations to alternatives and bigger allocations to real assets. Allocations within real estate are switching a little bit from equity to debt. We are seeing that, hearing it and it’s not just talk,” Creswell said. “It was real estate equity for the past 10 years, pretty much uninterrupted. But now you’re seeing many institutions with greater interest in debt.”
The firm is seeking to expand at a time of significant change and disruption. In addition to a pullback among bank lenders, there are also many fewer banks than there were in the past, Creswell noted.
“We are getting more people coming to us because they don’t have as many options. That also allows us to be choosier and increases the opportunity for us and our investors,” Creswell said.
The firm will be hiring in Canada, the US and globally. It is still working on details around eventual strategies but hopes to launch with a structure that will allow it to offer closed- and open-ended funds for clients in North America, Europe and the Middle East as well as some bespoke mandates for family offices and smaller institutions.
“You grow if you have something interesting and repeatable,” Creswell said. “We built this great engine, and more and more people are finding out about it. From an investor standpoint, we are more of a new kid on the block in the US and when people hear the story of how, for example, we have had 30 people on the ground in Dallas I think we’ll get a warm reception from institutional and high-net-worth investors.”
For a firm that started out as a lender, Trez Capital has evolved into what Creswell believes is a full investment management firm.
“We will always have that lender and financier muscle memory that is part of our DNA, but we also have a history of dedicated equity funds,” Creswell. “If you know your client well, understand their business, are aligned to them and bring value, there will always be repeat business to do.”