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US Bank set to dig into niche sectors ahead of planned East Coast growth plan

The Minneapolis lender believes having a smaller number of clients with bigger relationships is the best way forward.

Year in Review 2021 2022

US Bank is betting that its expertise in niche sectors will be one of the best ways to stay competitive in 2022, as the Minneapolis-based lender hopes to expand its business.

Sadhvi Subramanian, senior vice-president, tells Real Estate Capital USA the bank is expecting 2022 to be a competitive year.

“In 2022, everybody’s anticipating there will be a lot of deal flow, a lot of activity, but it’s going to get tougher to win the right deals,” Subramanian says.

The Minneapolis bank reckons the key to success will be carving out a strong niche.

“[This] could depend on what relationships you have with your clients, how you differentiate yourself from others as far as when you structure deals and how you can start moving into slightly niche products to be competitive, and yet to [still thrive in what will] be a very strong year for commercial real estate,” Subramanian says.

The firm is seeing borrowers shift from traditional sectors to industrial, office and residential alternatives, including single family rentals, student housing, senior housing, specialised warehouses such as cold storage and niche office sectors such as life sciences, medical buildings and data centers.

 

In the office sector, headwinds of the pandemic are still being felt largely due to the continued working from home situation for many office workers. Subramanian, however, believes a return to the officecould be in the cards for the first quarter of 2022, but there is still a lot of uncertainty. “Research indicates that office space projections are still unknown. Depending on how businesses determine their office space needs going into the next 18 months, it will impact the way firms will evaluate office loans, especially in more suburban markets,” she added.

 

Broader business strategy 

 

The firm has both recourse and non-recourse loans in its portfolio, works with the likes of local developers, institutional players, debt funds, REITS and home builders. It structures all product types including construction stabilized loans, value add transactions, and subscription lines of credit. Loan sizes vary, ranging from a minimum of around $20 million to $30 million to $150 or more. REITs, Debt Funds and Home Builders are handled in specialized CRE divisions.

“It’s always better to have smaller number of clients that you have big relationships with, especially for larger institutions, so you can service them well and become trusted advisors and you are significant to them and they are significant to you so you work well together,” said Subramanian. “We have the ability to take large hold positions and principal significant transactions for targeted clients.”

Subramanian was hired in October to lead commercial real estate for the bank’s East region, covering Washington, D.C.; Massachusetts; Ohio; Tennessee; Kentucky; North Carolina; South Carolina; Georgia; and Florida.

Geographically, the markets US Bank will look to focus on in Subramanian’s portfolio in 2022 year include some of the Sunbelt region, Boston, DC, and South Florida. “DC,Boston, and the Southeast are poised for pretty high growth,” added Subramanian.