Nov. 12, 2025
CMBS Explained: Trusts, Servicers & Real Strategy in 2026
Billions in CMBS loans are coming due in 2026 — and most borrowers still don’t understand how the system really works.
In this episode, Aviva Sonenreich sits down with Michael Cohen, Managing Principal at Brighton Capital Advisors, to break down how CMBS trusts, servicers, and bondholders interact — and what borrowers must do to protect their equity.
Highlights:
- How CMBS trusts actually function (and who really owns your loan)
- Why calling your servicer is like dialing 1-800-MORTGAGE
- The biggest mistake borrowers make when entering special servicing
- How to approach CMBS workouts and loan modifications strategically
- Why CMBS remains one of the few active lending channels heading into 2026
Perfect For:
Borrowers with CMBS loans coming due, investors looking for distress before it hits auction, and anyone trying to understand what’s really driving the 2026 debt market.
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This week's listener of the week
is Tony Tadoni.
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Tony, thank you so much for
leaving us a five star review.
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And for those of you listening,
if you leave us a five star
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review below, it might be next
week's Listener of the Week,
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Week, week.
This week on commercial real
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estate Secrets, we have Mr.
Michael Cohen.
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Michael Cohen is the managing
principal at Brighton Capital
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Advisors.
Michael, thank you for being on
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the show today.
Thanks.
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For having me.
For the listeners, Mr. Cohen,
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who are you, what do you do, and
how did we end up here today on
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commercial real estate secrets?
I am a C MB S advisor for
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borrowers who are going through
issues with their current CMBS
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slump.
And I started this company five
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years ago after 27 years of
being in top tier CMBS platforms
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of making these loans.
And during COVID realized that
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there was going to be a lot of
issues that occurred and people
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weren't going to understand the
complexities behind going to
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their servicer because it's
effectively like calling 1800
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mortgage and you don't have any
personal contact.
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So being able to help the
borrowers is something that I
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like.
Being able to understand the
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issues where nobody else does
means that we really don't have
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any other competition in this,
in this world.
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We with and I'll talk about my
company, how it's comprised, but
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it's honestly it's people from
within the system.
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So we can understand it and
really working with the bar and
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their client to help them
understand how to get through it
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is is really what we do or what
we're really the best at?
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So for the listeners, maybe
they've never heard of a C, MB,
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S loan.
What does that stand for and
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what is it?
Yeah.
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So when you get a loan on a
property like any property, your
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home or a car, you go to the
lender and they give you a loan
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and then they take your whatever
your asset is, is collateral.
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In the 1990's, the banks were
having a very difficult time of
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obviously there are a lot of
savings and loans were going
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under and there's a lot of
issues with insurance companies
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and banks.
They could not, they were
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getting rental loans because
they were having liquidity
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problems and so you couldn't get
a new loan.
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Well, that's not a good scenario
for the market just like it is
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in today and the last couple
years post COVID.
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So an industry was really born
called commercial
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mortgage-backed securities.
What is that?
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Well, when you make loans, their
financial derivative, meaning
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they're just a bond of if
everybody pays their principal
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and interest every month and
it's like buying a bond of from
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Apple or or from anywhere else,
you're just getting payments.
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So in residential backed
securities with a which they
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sell all the time, it's kind of
the same thing, which is they
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make you, you get a loan and
then they put it into a bond and
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then they sell the strips of the
bond to people.
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So you basically sign the future
cash flows for present value
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today.
Well, you can do that it with
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anything.
You could do that with auto
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loans.
You can do that with cell phone
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towers.
You can do it with, I remember
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in the 90s they started doing
James Brown's royalties.
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They just did it for Queen.
They did it for Bruce
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Springsteen, They do it for.
So it's just a few predictable
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future cash flow of which you
can then pay somebody back the
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same way as if you Apple or or
Tesla needed bonds and you and
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they and they needed debt, they
issue bonds and they pay you
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back.
So commercial mortgage-backed
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securities started in, in the
early 90s and I was there in the
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very beginning, I kind of fell
into it because there was doing
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all of this work for, for, to,
to try to work out these bank
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loans individually.
And the advantage to the
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investors who buy these pieces
of the, of the bond for, from
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commercial mortgage-backed
securities is that they're
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tradeable.
So I can I, if I, if I don't
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like my, and, and, and they're
also diversified.
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So a perfect pool is 100 loans
at, at, at, at $20 million each
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and, and 52 different markets
there 50 different markets and,
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and all the asset classes.
That way if something bad
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happens, it's not going to
happen to everybody.
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It's just a portion.
So it became a really positive
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things for insurance companies
and pension plans because these
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these pools are really sized
about a billion dollars.
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And the reason why they like it
is because they can have an
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actual kind of real estate is
illiquid, obviously.
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And so it makes it more liquid.
You could trade these things,
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you can get rid of them, you can
you can keep them.
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And the bad news is, is that and
the good news for the borrower.
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Let's stay in the good news.
The good news for the borrower
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is because we're selling them in
pieces and diversified and
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they're not staying at a balance
sheet is that you get the
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advantage of maybe getting more,
more loan to value or getting a
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better, more interest, only
getting a better coupon.
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It's they're non recourse loans,
meaning you're, they're not
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personally guaranteed except for
the things that you know, you
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shouldn't be doing in life, you
know, dumping nuclear waste on
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the property or, or taking the
taxes or using the insurance
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proceeds.
And so a lot of people like
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these things because they are
good and, and they gave you a
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lot of money and they gave it,
they gave a really good return.
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So what's the bad part?
The bad part is the good part.
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And, and if you pay it off in
time, you just had a great love.
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So it really started out as
multi families and industrial
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properties where there's not
much movement.
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You know, you're going to get
paid off in the next 10 years.
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Well, the, the problem is once
you, once these banks, you, we
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went to one of your, your top
tier banks that, that does this
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for a living and they made you a
loan and you know, all the
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people there.
Well, once they sold your loan
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into the bond, that's it.
They're done.
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They just sold their loan, they
take their profit and now it's
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in there.
So the question is, what do you
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do if you have a problem with
your loan?
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Who do you call?
Because not, you're not a, you
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don't know the, the people that
you're calling and you don't
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really, most more than likely
understand.
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You could see the tip of the
iceberg, but you don't
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understand what's going on.
And the investor or that
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servicer is, really has no
alignment with you that you're
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not a customer of theirs.
You're you're just a clients
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you're, you're calling up and
they're saying, sorry, this is
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what the paper says and this is
what the fees are.
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And I don't really care or I
don't have to get back to you
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that fast or worse yet, as you
go down.
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And I'll explain kind of in this
call.
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Well, deep this goes, you
haven't you, you have an
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investor in the back end who's
saying, hey, you know what, I
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kind of like your property.
So why don't, why don't I just
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you're not participating.
I'll just, I'll just take your
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property and I'll hold on to it
and I'll make money.
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So little bit of like a pawn
shop.
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So Gary, good news on the front,
bad news on the back.
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If, if something goes wrong and
you're not prepared, and that's
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really where I come in.
I, I've been doing CMBS since
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1991.
I started out at, at DLJ.
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We formed a number of, of what
they're called conduits where,
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which is the origination
platforms.
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I moved down to Charlotte, NC in
1996 to start first unions
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program, which is now Wells
Fargo.
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I stayed in Charlotte, but
worked for, for, for Deutsche
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Bank, than UBS, the city and I
ran the southeast the last 20
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years of my 28 year career, I
ran the Southeast and
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Mid-Atlantic.
So you know, a lot of people got
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a lot of people out of problems
during the cycles.
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Understand the loan documents,
understand what you, what you,
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what the advantages and
disadvantages are of this.
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So that's, so I started this
business in 2020.
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I mean, that's and, and I really
started it because I realized
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that COVID was almost like, if
you think about the airport, if
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it closes down for a day, it's
an issue.
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If you, if it closes down for
three days, it's a problem.
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If it closes down for a year and
a half, you know, we're, we're
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going to, we're going to have
some problems.
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I did not realize it was going
to be this big and I big and I
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and I built a structure of other
advisors with other experience
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skill set sitting around the
table so that when we get it, we
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can look at it.
OK, so why is it so big?
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Why is it since 2020?
CMBS is a word we're hearing in
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the headlines daily.
Because you, you only hear them
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more in the headlines because
the bank balance sheets and
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after, after the, the Great
Recession, the, the, the
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government went in and kind of
made the bank balance sheets
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stronger, said, OK, you're going
to have more reserves.
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You're going to do things to
shore up.
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You're not going to have the
liquidity problem.
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So the banks themselves and the
insurance companies with balance
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sheets actually have a bigger
problem than CMBS because they
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actually are holding these loans
and they just keep marking them
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to market.
But they keep holding these
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loans.
They're not getting rid of them.
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CMBS is a non balance sheet
lender.
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It is the loans again were sold
to investors.
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There's they're sold in bond
strips.
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So nobody owns 100% of them.
So when you hear the B piece
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buyer, they're the last.
It's, it's a waterfall of how
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that when people make their
principal and interest payments
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every month, it pays off the AAA
bond holders, the AA, the single
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A, the triple P, the double B,
the single B and then so on it
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until it gets to the bottom.
And that bottom is the, it's
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called the B piece or equity
piece or non rated piece, 'cause
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there's, they don't they, the,
it's a little more complicated,
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but the bottom line is the
special servicer is the guy
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going, hey, I'm paid at the end.
I better make sure I get mine
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right.
Like, so if the property goes
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bad, I want to make the
decisions on how we modify it.
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So, so when you look at that,
and again, a bank has
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relationships, if we go under
the bank and we make a loan,
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well, it's like, hey, well, you
know, we have your checking, we
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have your, we have your savings,
we have your business loan.
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The CMBS, the CMBS investors
have nothing.
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It's, they have their loan.
And, and so you hear more
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headlines because they're more
aggressive and they can be more
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aggressive and the fees are
stronger.
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So, and the real reason why you
heard of them post 2020 or post
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COVID, because it's a bond
structure, it's called the Remic
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Trust and the Remic try, it's
the real estate investment.
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I, I can't recall the, the, the,
the definition, but it's a, it's
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very heavily tax oriented.
So they don't have the pressure
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of moving things off their
balance sheet, but they do have
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the pressure of they can't do
certain things for, for one of
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two reasons.
One, because there's a tax issue
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that I can't just uncross your
two properties and give you a
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deal.
And second, because they're in
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the business to make money and
there is something called the
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pooling and servicing agreement,
which is created after you you
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go in, you get a loan, you're
like, yeah, closing good.
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All right.
Then you go and 100 other people
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may close their loans and the
bank says, OK, thanks a lot.
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And then goes and makes the bond
and sells the bond.
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And then when they sell the bond
to the end, they sell this
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what's called the servicing
rights.
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That's who's going to be your
servicer.
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So you don't know who the
servicer and the master and the
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special service are going to be
at the very beginning, but those
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are dictated by what's called
the pooling and servicing
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agreement.
And that outlines all the fees
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that you're going to incur.
But you, you, you, this is post
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you closing loan.
So, so there's a lot of that.
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They're definitely geared
towards collecting as as as much
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of the fee that they can from
you.
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There used to be an average of
and seeing MBS 1.0, which is
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before the Great Recession.
It was, hey, I need to get into
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00:12:19,160 --> 00:12:22,680
the CMBS special servicer
immediately because they're the
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decision makers and I'm going to
negotiate with them and we're
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00:12:26,280 --> 00:12:28,920
going to fight the fight.
Well, I could tell you safely
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that that's the worst possible
thing you could do today.
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You really don't want to rush to
go in there.
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00:12:33,120 --> 00:12:36,400
You lose all of your authority,
you lose any power that you did
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00:12:36,400 --> 00:12:39,280
have and you really don't and
you can't take it.
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00:12:39,280 --> 00:12:46,000
You can't negotiate that well.
Well you are a wealth of
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00:12:46,000 --> 00:12:48,400
knowledge on this topic and I'm
glad we're here today.
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OK so the year is 2025 and I
want to buy.
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00:12:54,640 --> 00:12:56,920
I'm looking for a deal.
I'm a commercial real estate
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00:12:56,920 --> 00:13:02,560
investor.
How am I using CMBS information?
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00:13:02,560 --> 00:13:07,200
Where A where am I finding it
and then B how am I using it to
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buy property or get an edge?
OK.
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So I'm going to start with where
CMBS is the most accessible and
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best today, that is to go get a
loan because where are the banks
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in the balance sheet?
Lenders are not available to
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00:13:23,280 --> 00:13:27,640
make as many loans or can make
certain types of loans that
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00:13:27,640 --> 00:13:30,160
commercial mortgage-backed
securities is open for business
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00:13:30,160 --> 00:13:33,280
and the same reasons it was open
in 1991 when there was a
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00:13:33,600 --> 00:13:36,360
recession is because it's a port
in the storm.
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If you love it, no, But is it
good?
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00:13:38,560 --> 00:13:40,920
Yeah.
Will you get you, will you get
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00:13:40,920 --> 00:13:42,240
more leverage?
Probably will.
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00:13:42,400 --> 00:13:44,800
Are there are there things that
the banks, because they have
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00:13:44,800 --> 00:13:48,480
things on their balance sheet
can't do that that the CNBS can
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00:13:48,480 --> 00:13:49,000
do?
Yes.
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00:13:49,000 --> 00:13:53,520
So that's where 99% of what I'm
going to tell you about in CNBS
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00:13:53,520 --> 00:13:58,800
servicing or CNBS is in, in the,
for the borrowing in the, in the
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00:13:58,800 --> 00:14:02,240
Great Recession and CMBS, one
point O there's a, there's a
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00:14:02,240 --> 00:14:06,000
liquidity crisis and you would
go to the special servicer and
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00:14:06,040 --> 00:14:08,000
to buy loans like, Hey, do you
have a loan?
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00:14:08,000 --> 00:14:10,200
Hey, you know, I was like, I had
two guys in the alley, like,
253
00:14:10,360 --> 00:14:12,960
I'll say orange, you say banana.
And the next thing you know,
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00:14:13,240 --> 00:14:14,560
you're going to feel on your
hand, right?
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00:14:15,000 --> 00:14:19,640
So, but now because of the
fiduciaries of, of
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00:14:19,640 --> 00:14:22,720
responsibilities of the
servicers, they're, they're
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00:14:22,720 --> 00:14:24,480
going to take any loan that they
have.
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00:14:24,880 --> 00:14:29,000
And if you, they're most more
than likely going to put it out
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00:14:29,000 --> 00:14:33,080
to the market via brokerage or
through an auction website.
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00:14:34,080 --> 00:14:39,000
You, you may be a family office
or a wealthy investor or some
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00:14:39,000 --> 00:14:42,840
relationship of that investor to
maybe get it handed to you.
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00:14:43,160 --> 00:14:48,240
But but waiting around to get
that property is, is going to be
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00:14:48,240 --> 00:14:49,960
fruitless.
You're going to be standing
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00:14:49,960 --> 00:14:52,520
there.
So what I do tell people is this
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00:14:54,520 --> 00:15:00,280
the way to acquire a property
before and CMBS before it gets
266
00:15:00,280 --> 00:15:04,880
to that auction block is to find
the current owner of the
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00:15:04,880 --> 00:15:09,240
property who either is, wants to
get rid of it, wants to modify
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00:15:09,240 --> 00:15:15,280
it or wants to do something to
it that that either maybe, maybe
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00:15:15,280 --> 00:15:18,560
sell it and then work with that
current us.
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00:15:18,640 --> 00:15:21,960
Because we're the ones that can
help open up that opportunity.
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00:15:21,960 --> 00:15:24,200
Because then I'll tell you what
we do more specifically in a
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00:15:24,200 --> 00:15:26,960
minute.
But we are the ones that you
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00:15:26,960 --> 00:15:30,000
would talk to, to work with the
servicer and say, Hey, look, we
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00:15:30,000 --> 00:15:33,600
have a new, we have a, we have a
property that's not doing well.
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00:15:34,200 --> 00:15:36,240
They need equity.
The borrower's out of equity,
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00:15:36,240 --> 00:15:39,360
but the but we have an investor
that's coming in and then, you
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00:15:39,360 --> 00:15:42,240
know, I, we don't raise equity.
So you know, you guys bring in
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00:15:42,240 --> 00:15:46,080
the equity in and that that the
investor will either come in and
279
00:15:46,080 --> 00:15:49,840
they'll be a a preferred equity
and then they and then they
280
00:15:49,840 --> 00:15:53,960
become part of the ownership or
maybe they come in and they
281
00:15:53,960 --> 00:15:58,000
modify the loan and and buy the
loan and buy and buy the asset.
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00:15:58,000 --> 00:16:02,520
But the key is that we have to
and key figuratively is because
283
00:16:02,520 --> 00:16:06,720
we are unlocking this from being
stuck in CMBS service.
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00:16:08,560 --> 00:16:13,360
Makes sense.
Yes and no.
285
00:16:13,560 --> 00:16:17,920
And the reason I say no is
because it feels like the
286
00:16:17,920 --> 00:16:26,160
recession we had in 2008 was the
result of selling debt and it
287
00:16:26,160 --> 00:16:31,160
all blowing up in our faces and
almost feels like that this is
288
00:16:31,160 --> 00:16:37,200
the same scenario.
Except, except, except the
289
00:16:37,200 --> 00:16:41,640
market now has so all the
investors that are sitting on
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00:16:41,640 --> 00:16:44,440
the sidelines are sitting there
flush with cash.
291
00:16:45,240 --> 00:16:49,080
And that's the big difference.
The thing about the whole, I'll
292
00:16:49,080 --> 00:16:51,560
give you the best, the best,
the, the way to make this really
293
00:16:51,640 --> 00:16:56,680
relatable is remember the, in
the, in the residential market
294
00:16:56,680 --> 00:17:02,600
crash and you had a home and you
bought it for, you bought it for
295
00:17:03,080 --> 00:17:09,200
$100 and then all of a sudden it
is worth like $50 and you went
296
00:17:09,200 --> 00:17:12,440
in and you're like, Oh my God,
I, I might now it's coming due.
297
00:17:12,440 --> 00:17:14,319
I don't want to put more money
into this.
298
00:17:14,319 --> 00:17:15,839
And like I'm never getting out
of it.
299
00:17:16,400 --> 00:17:20,640
It's a similar situation, but
the difference is unlike before
300
00:17:20,640 --> 00:17:23,040
where you just had the, the
lender said, Oh, I got to sell
301
00:17:23,040 --> 00:17:25,440
this thing because I just got to
get my money because my bank is
302
00:17:25,440 --> 00:17:27,680
going under.
They don't, nobody has that
303
00:17:27,680 --> 00:17:31,720
pressure anymore because there's
enough, there's enough private
304
00:17:31,720 --> 00:17:34,520
equity out there in order to
absorb all of this.
305
00:17:35,160 --> 00:17:37,640
But people don't want to sell
naturally, right?
306
00:17:37,640 --> 00:17:40,480
I mean, if you think that you
have a good property and it
307
00:17:40,480 --> 00:17:44,520
needs more time, then you call
somebody like us to help
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00:17:44,520 --> 00:17:47,840
navigate you through those
complexities of the servicing,
309
00:17:47,840 --> 00:17:50,280
because it's not.
I always give this example.
310
00:17:50,280 --> 00:17:54,040
If you were to go and we in, in
the two of us, we owned a, we
311
00:17:54,040 --> 00:17:57,640
owned a house, an apartment
building, a shopping center and,
312
00:17:57,680 --> 00:18:01,000
and Aviva and I have this, this,
this, this great center.
313
00:18:01,000 --> 00:18:04,800
And boy, we just lost a tenant
and we got it with, you know,
314
00:18:05,600 --> 00:18:09,800
you know, Woody Creek savings
alone, OK, and Woody and we know
315
00:18:09,800 --> 00:18:11,640
all the people there.
We love the people there and
316
00:18:11,640 --> 00:18:13,400
they call us and they like Mike
and Aviva.
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00:18:13,720 --> 00:18:15,680
Sure.
Well, let me talk, this is this
318
00:18:15,680 --> 00:18:17,200
is Bob.
I'm going to talk to Sue and
319
00:18:17,200 --> 00:18:19,360
we're going to talk to Fred and
Frank and and we're going to
320
00:18:19,360 --> 00:18:23,160
then talk to Tina and they come
back and say this is what we're
321
00:18:23,160 --> 00:18:25,200
going to do for you because
you're such great customers.
322
00:18:25,560 --> 00:18:29,920
OK, well, what if we went to
1800 mortgage instead?
323
00:18:31,200 --> 00:18:34,400
And we're like, now what?
And I'm like, well, this doesn't
324
00:18:34,400 --> 00:18:36,600
get, you know, we're, we're,
this is not the guidelines
325
00:18:36,880 --> 00:18:38,480
you're, you're in.
You know what?
326
00:18:38,480 --> 00:18:41,440
In fact, we're, we're going to
just take your property or
327
00:18:41,600 --> 00:18:46,640
we're, we're going to we, we
need you to do this and X and we
328
00:18:46,640 --> 00:18:48,240
and this is the way we'll do it
or else.
329
00:18:48,800 --> 00:18:54,000
So you really need in my in, in
the world of what I do
330
00:18:54,000 --> 00:18:55,440
commercial mortgage-backed
securities.
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00:18:55,440 --> 00:18:58,800
You need somebody like me.
I don't know what I'd be doing
332
00:18:58,880 --> 00:19:02,320
in my life.
If, if, if this is all I know,
333
00:19:02,320 --> 00:19:05,040
this is all I've done.
I have a, I've a, I've a person
334
00:19:05,400 --> 00:19:10,920
that he worked for 25 years as a
external lawyer and an an
335
00:19:10,920 --> 00:19:14,720
internal lawyer.
Bank of America closing the real
336
00:19:14,720 --> 00:19:19,040
estate loans from the legal side
working in large loan special
337
00:19:19,040 --> 00:19:20,920
servicing of working out these
loans.
338
00:19:21,360 --> 00:19:24,840
I have another woman that spent
20 years at at Wells Fargo
339
00:19:24,840 --> 00:19:28,160
working in CMBS special
servicing where she was the one
340
00:19:28,160 --> 00:19:31,040
that you'd have talked to to
figure out how to do this.
341
00:19:31,040 --> 00:19:32,800
So why do I have these people
around me?
342
00:19:33,760 --> 00:19:36,920
Because those and some other
specialists, when a borrower
343
00:19:36,920 --> 00:19:39,680
comes to me, I want to be able
to see the problem from every
344
00:19:39,680 --> 00:19:41,040
angle.
I want to be able to look at it
345
00:19:41,040 --> 00:19:44,920
with a 360° view.
And then along with their
346
00:19:44,920 --> 00:19:48,400
attorney, we can actually give
the borrower all the opportunity
347
00:19:48,400 --> 00:19:50,920
they need to make an informed
decision.
348
00:19:54,160 --> 00:19:57,160
Michael, this has been a crash
course.
349
00:19:57,400 --> 00:20:01,440
We've covered what CBS actually
is, why it's suddenly in every
350
00:20:01,440 --> 00:20:05,280
headline, and how borrowers get
stuck with the wrong servicer.
351
00:20:05,680 --> 00:20:09,240
We're going to pause here and
pick this up in Part 2, where we
352
00:20:09,240 --> 00:20:13,200
cover distress deals.
Where the opportunities are and
353
00:20:13,200 --> 00:20:16,240
what investors should actually
do next.
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00:20:16,520 --> 00:20:19,320
If you're listening, make sure
to subscribe so you don't miss
355
00:20:19,320 --> 00:20:24,200
Part 2 with Michael Cohen.
Trust me, it gets even better.
356
00:20:25,360 --> 00:20:28,640
We'll see you next week on
Commercial Real Estate Secrets.
00:00:03,000 --> 00:00:07,120
This week's listener of the week
is Tony Tadoni.
2
00:00:07,120 --> 00:00:10,520
Tony, thank you so much for
leaving us a five star review.
3
00:00:11,000 --> 00:00:13,640
And for those of you listening,
if you leave us a five star
4
00:00:13,640 --> 00:00:18,560
review below, it might be next
week's Listener of the Week,
5
00:00:18,760 --> 00:00:21,600
Week, week.
This week on commercial real
6
00:00:21,600 --> 00:00:23,800
estate Secrets, we have Mr.
Michael Cohen.
7
00:00:24,600 --> 00:00:28,720
Michael Cohen is the managing
principal at Brighton Capital
8
00:00:28,720 --> 00:00:30,560
Advisors.
Michael, thank you for being on
9
00:00:30,560 --> 00:00:31,320
the show today.
Thanks.
10
00:00:31,920 --> 00:00:36,160
For having me.
For the listeners, Mr. Cohen,
11
00:00:36,560 --> 00:00:40,000
who are you, what do you do, and
how did we end up here today on
12
00:00:40,000 --> 00:00:46,240
commercial real estate secrets?
I am a C MB S advisor for
13
00:00:46,240 --> 00:00:50,440
borrowers who are going through
issues with their current CMBS
14
00:00:50,440 --> 00:00:54,840
slump.
And I started this company five
15
00:00:54,840 --> 00:01:01,320
years ago after 27 years of
being in top tier CMBS platforms
16
00:01:01,320 --> 00:01:05,280
of making these loans.
And during COVID realized that
17
00:01:05,280 --> 00:01:08,760
there was going to be a lot of
issues that occurred and people
18
00:01:08,760 --> 00:01:12,000
weren't going to understand the
complexities behind going to
19
00:01:12,000 --> 00:01:15,520
their servicer because it's
effectively like calling 1800
20
00:01:15,520 --> 00:01:18,760
mortgage and you don't have any
personal contact.
21
00:01:19,520 --> 00:01:23,520
So being able to help the
borrowers is something that I
22
00:01:23,520 --> 00:01:27,080
like.
Being able to understand the
23
00:01:27,080 --> 00:01:32,400
issues where nobody else does
means that we really don't have
24
00:01:32,400 --> 00:01:34,960
any other competition in this,
in this world.
25
00:01:35,480 --> 00:01:39,440
We with and I'll talk about my
company, how it's comprised, but
26
00:01:39,440 --> 00:01:42,840
it's honestly it's people from
within the system.
27
00:01:43,040 --> 00:01:47,080
So we can understand it and
really working with the bar and
28
00:01:47,080 --> 00:01:49,760
their client to help them
understand how to get through it
29
00:01:49,760 --> 00:01:53,320
is is really what we do or what
we're really the best at?
30
00:01:54,240 --> 00:01:57,640
So for the listeners, maybe
they've never heard of a C, MB,
31
00:01:57,640 --> 00:01:59,240
S loan.
What does that stand for and
32
00:01:59,240 --> 00:02:00,480
what is it?
Yeah.
33
00:02:00,480 --> 00:02:04,280
So when you get a loan on a
property like any property, your
34
00:02:04,280 --> 00:02:07,360
home or a car, you go to the
lender and they give you a loan
35
00:02:07,360 --> 00:02:10,960
and then they take your whatever
your asset is, is collateral.
36
00:02:11,600 --> 00:02:16,120
In the 1990's, the banks were
having a very difficult time of
37
00:02:16,120 --> 00:02:18,640
obviously there are a lot of
savings and loans were going
38
00:02:18,640 --> 00:02:22,280
under and there's a lot of
issues with insurance companies
39
00:02:22,280 --> 00:02:23,960
and banks.
They could not, they were
40
00:02:23,960 --> 00:02:26,160
getting rental loans because
they were having liquidity
41
00:02:26,160 --> 00:02:28,960
problems and so you couldn't get
a new loan.
42
00:02:28,960 --> 00:02:31,760
Well, that's not a good scenario
for the market just like it is
43
00:02:31,760 --> 00:02:34,440
in today and the last couple
years post COVID.
44
00:02:35,160 --> 00:02:38,560
So an industry was really born
called commercial
45
00:02:38,560 --> 00:02:40,520
mortgage-backed securities.
What is that?
46
00:02:40,560 --> 00:02:45,760
Well, when you make loans, their
financial derivative, meaning
47
00:02:45,760 --> 00:02:49,120
they're just a bond of if
everybody pays their principal
48
00:02:49,120 --> 00:02:52,280
and interest every month and
it's like buying a bond of from
49
00:02:52,280 --> 00:02:56,040
Apple or or from anywhere else,
you're just getting payments.
50
00:02:57,000 --> 00:03:00,480
So in residential backed
securities with a which they
51
00:03:00,480 --> 00:03:03,520
sell all the time, it's kind of
the same thing, which is they
52
00:03:03,520 --> 00:03:07,320
make you, you get a loan and
then they put it into a bond and
53
00:03:07,320 --> 00:03:10,320
then they sell the strips of the
bond to people.
54
00:03:10,320 --> 00:03:13,960
So you basically sign the future
cash flows for present value
55
00:03:13,960 --> 00:03:17,000
today.
Well, you can do that it with
56
00:03:17,000 --> 00:03:18,640
anything.
You could do that with auto
57
00:03:18,640 --> 00:03:20,200
loans.
You can do that with cell phone
58
00:03:20,200 --> 00:03:22,400
towers.
You can do it with, I remember
59
00:03:22,400 --> 00:03:26,120
in the 90s they started doing
James Brown's royalties.
60
00:03:26,120 --> 00:03:29,200
They just did it for Queen.
They did it for Bruce
61
00:03:29,200 --> 00:03:33,040
Springsteen, They do it for.
So it's just a few predictable
62
00:03:33,040 --> 00:03:35,840
future cash flow of which you
can then pay somebody back the
63
00:03:35,840 --> 00:03:42,480
same way as if you Apple or or
Tesla needed bonds and you and
64
00:03:42,480 --> 00:03:45,040
they and they needed debt, they
issue bonds and they pay you
65
00:03:45,040 --> 00:03:47,880
back.
So commercial mortgage-backed
66
00:03:47,880 --> 00:03:51,560
securities started in, in the
early 90s and I was there in the
67
00:03:51,560 --> 00:03:54,040
very beginning, I kind of fell
into it because there was doing
68
00:03:54,040 --> 00:03:59,000
all of this work for, for, to,
to try to work out these bank
69
00:03:59,000 --> 00:04:02,200
loans individually.
And the advantage to the
70
00:04:02,200 --> 00:04:06,240
investors who buy these pieces
of the, of the bond for, from
71
00:04:06,240 --> 00:04:09,080
commercial mortgage-backed
securities is that they're
72
00:04:09,080 --> 00:04:11,840
tradeable.
So I can I, if I, if I don't
73
00:04:11,840 --> 00:04:14,440
like my, and, and, and they're
also diversified.
74
00:04:14,440 --> 00:04:22,320
So a perfect pool is 100 loans
at, at, at, at $20 million each
75
00:04:22,440 --> 00:04:26,880
and, and 52 different markets
there 50 different markets and,
76
00:04:27,200 --> 00:04:30,040
and all the asset classes.
That way if something bad
77
00:04:30,040 --> 00:04:31,480
happens, it's not going to
happen to everybody.
78
00:04:31,480 --> 00:04:36,800
It's just a portion.
So it became a really positive
79
00:04:36,800 --> 00:04:39,800
things for insurance companies
and pension plans because these
80
00:04:39,800 --> 00:04:43,000
these pools are really sized
about a billion dollars.
81
00:04:44,440 --> 00:04:47,840
And the reason why they like it
is because they can have an
82
00:04:47,840 --> 00:04:51,080
actual kind of real estate is
illiquid, obviously.
83
00:04:51,080 --> 00:04:53,760
And so it makes it more liquid.
You could trade these things,
84
00:04:53,760 --> 00:04:55,800
you can get rid of them, you can
you can keep them.
85
00:04:57,280 --> 00:05:02,240
And the bad news is, is that and
the good news for the borrower.
86
00:05:02,240 --> 00:05:04,360
Let's stay in the good news.
The good news for the borrower
87
00:05:04,360 --> 00:05:08,680
is because we're selling them in
pieces and diversified and
88
00:05:08,680 --> 00:05:11,880
they're not staying at a balance
sheet is that you get the
89
00:05:11,880 --> 00:05:15,800
advantage of maybe getting more,
more loan to value or getting a
90
00:05:15,800 --> 00:05:18,760
better, more interest, only
getting a better coupon.
91
00:05:18,760 --> 00:05:22,080
It's they're non recourse loans,
meaning you're, they're not
92
00:05:22,080 --> 00:05:25,040
personally guaranteed except for
the things that you know, you
93
00:05:25,040 --> 00:05:29,840
shouldn't be doing in life, you
know, dumping nuclear waste on
94
00:05:29,840 --> 00:05:33,200
the property or, or taking the
taxes or using the insurance
95
00:05:33,200 --> 00:05:35,520
proceeds.
And so a lot of people like
96
00:05:35,520 --> 00:05:39,440
these things because they are
good and, and they gave you a
97
00:05:39,440 --> 00:05:41,880
lot of money and they gave it,
they gave a really good return.
98
00:05:42,520 --> 00:05:45,840
So what's the bad part?
The bad part is the good part.
99
00:05:45,840 --> 00:05:49,400
And, and if you pay it off in
time, you just had a great love.
100
00:05:49,400 --> 00:05:52,880
So it really started out as
multi families and industrial
101
00:05:52,880 --> 00:05:55,280
properties where there's not
much movement.
102
00:05:55,280 --> 00:05:57,520
You know, you're going to get
paid off in the next 10 years.
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00:05:58,160 --> 00:06:03,040
Well, the, the problem is once
you, once these banks, you, we
104
00:06:03,040 --> 00:06:06,280
went to one of your, your top
tier banks that, that does this
105
00:06:06,280 --> 00:06:09,520
for a living and they made you a
loan and you know, all the
106
00:06:09,520 --> 00:06:11,760
people there.
Well, once they sold your loan
107
00:06:11,760 --> 00:06:13,200
into the bond, that's it.
They're done.
108
00:06:13,200 --> 00:06:15,760
They just sold their loan, they
take their profit and now it's
109
00:06:15,760 --> 00:06:18,480
in there.
So the question is, what do you
110
00:06:18,480 --> 00:06:21,520
do if you have a problem with
your loan?
111
00:06:21,520 --> 00:06:25,880
Who do you call?
Because not, you're not a, you
112
00:06:25,880 --> 00:06:28,840
don't know the, the people that
you're calling and you don't
113
00:06:28,840 --> 00:06:31,200
really, most more than likely
understand.
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00:06:31,560 --> 00:06:33,440
You could see the tip of the
iceberg, but you don't
115
00:06:33,440 --> 00:06:38,440
understand what's going on.
And the investor or that
116
00:06:38,440 --> 00:06:41,240
servicer is, really has no
alignment with you that you're
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00:06:41,240 --> 00:06:45,360
not a customer of theirs.
You're you're just a clients
118
00:06:45,360 --> 00:06:48,480
you're, you're calling up and
they're saying, sorry, this is
119
00:06:48,480 --> 00:06:51,120
what the paper says and this is
what the fees are.
120
00:06:51,120 --> 00:06:53,360
And I don't really care or I
don't have to get back to you
121
00:06:53,360 --> 00:06:56,840
that fast or worse yet, as you
go down.
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00:06:56,840 --> 00:06:59,040
And I'll explain kind of in this
call.
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00:06:59,040 --> 00:07:02,680
Well, deep this goes, you
haven't you, you have an
124
00:07:02,680 --> 00:07:05,960
investor in the back end who's
saying, hey, you know what, I
125
00:07:05,960 --> 00:07:10,120
kind of like your property.
So why don't, why don't I just
126
00:07:10,120 --> 00:07:12,480
you're not participating.
I'll just, I'll just take your
127
00:07:12,480 --> 00:07:14,560
property and I'll hold on to it
and I'll make money.
128
00:07:14,560 --> 00:07:16,800
So little bit of like a pawn
shop.
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00:07:17,040 --> 00:07:21,320
So Gary, good news on the front,
bad news on the back.
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00:07:21,360 --> 00:07:24,480
If, if something goes wrong and
you're not prepared, and that's
131
00:07:24,480 --> 00:07:29,520
really where I come in.
I, I've been doing CMBS since
132
00:07:29,520 --> 00:07:34,040
1991.
I started out at, at DLJ.
133
00:07:34,040 --> 00:07:36,800
We formed a number of, of what
they're called conduits where,
134
00:07:36,800 --> 00:07:38,680
which is the origination
platforms.
135
00:07:39,040 --> 00:07:44,040
I moved down to Charlotte, NC in
1996 to start first unions
136
00:07:44,040 --> 00:07:46,400
program, which is now Wells
Fargo.
137
00:07:46,760 --> 00:07:50,760
I stayed in Charlotte, but
worked for, for, for Deutsche
138
00:07:50,760 --> 00:07:55,560
Bank, than UBS, the city and I
ran the southeast the last 20
139
00:07:55,560 --> 00:07:58,840
years of my 28 year career, I
ran the Southeast and
140
00:07:58,840 --> 00:08:01,680
Mid-Atlantic.
So you know, a lot of people got
141
00:08:01,680 --> 00:08:04,120
a lot of people out of problems
during the cycles.
142
00:08:04,120 --> 00:08:08,240
Understand the loan documents,
understand what you, what you,
143
00:08:08,320 --> 00:08:11,240
what the advantages and
disadvantages are of this.
144
00:08:11,280 --> 00:08:14,560
So that's, so I started this
business in 2020.
145
00:08:14,560 --> 00:08:18,000
I mean, that's and, and I really
started it because I realized
146
00:08:18,000 --> 00:08:21,480
that COVID was almost like, if
you think about the airport, if
147
00:08:21,480 --> 00:08:23,360
it closes down for a day, it's
an issue.
148
00:08:23,360 --> 00:08:26,840
If you, if it closes down for
three days, it's a problem.
149
00:08:27,120 --> 00:08:31,240
If it closes down for a year and
a half, you know, we're, we're
150
00:08:31,240 --> 00:08:32,520
going to, we're going to have
some problems.
151
00:08:32,520 --> 00:08:36,480
I did not realize it was going
to be this big and I big and I
152
00:08:36,480 --> 00:08:40,799
and I built a structure of other
advisors with other experience
153
00:08:40,960 --> 00:08:43,919
skill set sitting around the
table so that when we get it, we
154
00:08:43,919 --> 00:08:47,240
can look at it.
OK, so why is it so big?
155
00:08:47,240 --> 00:08:53,920
Why is it since 2020?
CMBS is a word we're hearing in
156
00:08:53,920 --> 00:08:57,680
the headlines daily.
Because you, you only hear them
157
00:08:57,680 --> 00:09:01,800
more in the headlines because
the bank balance sheets and
158
00:09:01,800 --> 00:09:05,040
after, after the, the Great
Recession, the, the, the
159
00:09:05,040 --> 00:09:07,760
government went in and kind of
made the bank balance sheets
160
00:09:07,760 --> 00:09:10,440
stronger, said, OK, you're going
to have more reserves.
161
00:09:10,440 --> 00:09:12,360
You're going to do things to
shore up.
162
00:09:12,360 --> 00:09:13,960
You're not going to have the
liquidity problem.
163
00:09:14,840 --> 00:09:19,440
So the banks themselves and the
insurance companies with balance
164
00:09:19,440 --> 00:09:23,480
sheets actually have a bigger
problem than CMBS because they
165
00:09:23,480 --> 00:09:26,200
actually are holding these loans
and they just keep marking them
166
00:09:26,200 --> 00:09:28,400
to market.
But they keep holding these
167
00:09:28,400 --> 00:09:29,640
loans.
They're not getting rid of them.
168
00:09:30,400 --> 00:09:34,000
CMBS is a non balance sheet
lender.
169
00:09:34,240 --> 00:09:37,240
It is the loans again were sold
to investors.
170
00:09:37,240 --> 00:09:39,200
There's they're sold in bond
strips.
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00:09:39,200 --> 00:09:43,840
So nobody owns 100% of them.
So when you hear the B piece
172
00:09:43,840 --> 00:09:46,520
buyer, they're the last.
It's, it's a waterfall of how
173
00:09:46,520 --> 00:09:48,600
that when people make their
principal and interest payments
174
00:09:48,600 --> 00:09:52,560
every month, it pays off the AAA
bond holders, the AA, the single
175
00:09:52,560 --> 00:09:55,440
A, the triple P, the double B,
the single B and then so on it
176
00:09:55,440 --> 00:09:59,200
until it gets to the bottom.
And that bottom is the, it's
177
00:09:59,200 --> 00:10:02,000
called the B piece or equity
piece or non rated piece, 'cause
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00:10:02,000 --> 00:10:04,640
there's, they don't they, the,
it's a little more complicated,
179
00:10:04,640 --> 00:10:07,120
but the bottom line is the
special servicer is the guy
180
00:10:07,120 --> 00:10:10,640
going, hey, I'm paid at the end.
I better make sure I get mine
181
00:10:10,640 --> 00:10:12,040
right.
Like, so if the property goes
182
00:10:12,040 --> 00:10:14,600
bad, I want to make the
decisions on how we modify it.
183
00:10:15,360 --> 00:10:18,680
So, so when you look at that,
and again, a bank has
184
00:10:18,680 --> 00:10:21,000
relationships, if we go under
the bank and we make a loan,
185
00:10:21,000 --> 00:10:23,000
well, it's like, hey, well, you
know, we have your checking, we
186
00:10:23,000 --> 00:10:25,720
have your, we have your savings,
we have your business loan.
187
00:10:26,320 --> 00:10:29,280
The CMBS, the CMBS investors
have nothing.
188
00:10:29,280 --> 00:10:32,680
It's, they have their loan.
And, and so you hear more
189
00:10:32,680 --> 00:10:36,880
headlines because they're more
aggressive and they can be more
190
00:10:36,880 --> 00:10:38,840
aggressive and the fees are
stronger.
191
00:10:39,080 --> 00:10:43,480
So, and the real reason why you
heard of them post 2020 or post
192
00:10:43,480 --> 00:10:49,640
COVID, because it's a bond
structure, it's called the Remic
193
00:10:49,760 --> 00:10:53,560
Trust and the Remic try, it's
the real estate investment.
194
00:10:53,560 --> 00:10:57,000
I, I can't recall the, the, the,
the definition, but it's a, it's
195
00:10:57,480 --> 00:11:02,560
very heavily tax oriented.
So they don't have the pressure
196
00:11:02,560 --> 00:11:05,280
of moving things off their
balance sheet, but they do have
197
00:11:05,280 --> 00:11:09,640
the pressure of they can't do
certain things for, for one of
198
00:11:09,640 --> 00:11:12,280
two reasons.
One, because there's a tax issue
199
00:11:12,880 --> 00:11:16,320
that I can't just uncross your
two properties and give you a
200
00:11:16,320 --> 00:11:19,240
deal.
And second, because they're in
201
00:11:19,240 --> 00:11:22,240
the business to make money and
there is something called the
202
00:11:22,240 --> 00:11:27,360
pooling and servicing agreement,
which is created after you you
203
00:11:27,360 --> 00:11:29,880
go in, you get a loan, you're
like, yeah, closing good.
204
00:11:29,880 --> 00:11:32,320
All right.
Then you go and 100 other people
205
00:11:32,320 --> 00:11:35,720
may close their loans and the
bank says, OK, thanks a lot.
206
00:11:35,960 --> 00:11:38,080
And then goes and makes the bond
and sells the bond.
207
00:11:38,080 --> 00:11:41,560
And then when they sell the bond
to the end, they sell this
208
00:11:41,560 --> 00:11:43,080
what's called the servicing
rights.
209
00:11:43,080 --> 00:11:44,480
That's who's going to be your
servicer.
210
00:11:44,480 --> 00:11:46,840
So you don't know who the
servicer and the master and the
211
00:11:46,840 --> 00:11:49,960
special service are going to be
at the very beginning, but those
212
00:11:49,960 --> 00:11:51,880
are dictated by what's called
the pooling and servicing
213
00:11:51,880 --> 00:11:54,160
agreement.
And that outlines all the fees
214
00:11:54,160 --> 00:11:57,720
that you're going to incur.
But you, you, you, this is post
215
00:11:57,720 --> 00:12:04,160
you closing loan.
So, so there's a lot of that.
216
00:12:04,160 --> 00:12:09,000
They're definitely geared
towards collecting as as as much
217
00:12:09,000 --> 00:12:10,600
of the fee that they can from
you.
218
00:12:10,600 --> 00:12:14,720
There used to be an average of
and seeing MBS 1.0, which is
219
00:12:14,720 --> 00:12:19,120
before the Great Recession.
It was, hey, I need to get into
220
00:12:19,160 --> 00:12:22,680
the CMBS special servicer
immediately because they're the
221
00:12:22,680 --> 00:12:26,280
decision makers and I'm going to
negotiate with them and we're
222
00:12:26,280 --> 00:12:28,920
going to fight the fight.
Well, I could tell you safely
223
00:12:28,920 --> 00:12:31,240
that that's the worst possible
thing you could do today.
224
00:12:31,280 --> 00:12:33,120
You really don't want to rush to
go in there.
225
00:12:33,120 --> 00:12:36,400
You lose all of your authority,
you lose any power that you did
226
00:12:36,400 --> 00:12:39,280
have and you really don't and
you can't take it.
227
00:12:39,280 --> 00:12:46,000
You can't negotiate that well.
Well you are a wealth of
228
00:12:46,000 --> 00:12:48,400
knowledge on this topic and I'm
glad we're here today.
229
00:12:49,840 --> 00:12:53,880
OK so the year is 2025 and I
want to buy.
230
00:12:54,640 --> 00:12:56,920
I'm looking for a deal.
I'm a commercial real estate
231
00:12:56,920 --> 00:13:02,560
investor.
How am I using CMBS information?
232
00:13:02,560 --> 00:13:07,200
Where A where am I finding it
and then B how am I using it to
233
00:13:07,200 --> 00:13:09,720
buy property or get an edge?
OK.
234
00:13:10,240 --> 00:13:15,240
So I'm going to start with where
CMBS is the most accessible and
235
00:13:15,240 --> 00:13:20,400
best today, that is to go get a
loan because where are the banks
236
00:13:20,400 --> 00:13:23,280
in the balance sheet?
Lenders are not available to
237
00:13:23,280 --> 00:13:27,640
make as many loans or can make
certain types of loans that
238
00:13:27,640 --> 00:13:30,160
commercial mortgage-backed
securities is open for business
239
00:13:30,160 --> 00:13:33,280
and the same reasons it was open
in 1991 when there was a
240
00:13:33,600 --> 00:13:36,360
recession is because it's a port
in the storm.
241
00:13:36,480 --> 00:13:38,560
If you love it, no, But is it
good?
242
00:13:38,560 --> 00:13:40,920
Yeah.
Will you get you, will you get
243
00:13:40,920 --> 00:13:42,240
more leverage?
Probably will.
244
00:13:42,400 --> 00:13:44,800
Are there are there things that
the banks, because they have
245
00:13:44,800 --> 00:13:48,480
things on their balance sheet
can't do that that the CNBS can
246
00:13:48,480 --> 00:13:49,000
do?
Yes.
247
00:13:49,000 --> 00:13:53,520
So that's where 99% of what I'm
going to tell you about in CNBS
248
00:13:53,520 --> 00:13:58,800
servicing or CNBS is in, in the,
for the borrowing in the, in the
249
00:13:58,800 --> 00:14:02,240
Great Recession and CMBS, one
point O there's a, there's a
250
00:14:02,240 --> 00:14:06,000
liquidity crisis and you would
go to the special servicer and
251
00:14:06,040 --> 00:14:08,000
to buy loans like, Hey, do you
have a loan?
252
00:14:08,000 --> 00:14:10,200
Hey, you know, I was like, I had
two guys in the alley, like,
253
00:14:10,360 --> 00:14:12,960
I'll say orange, you say banana.
And the next thing you know,
254
00:14:13,240 --> 00:14:14,560
you're going to feel on your
hand, right?
255
00:14:15,000 --> 00:14:19,640
So, but now because of the
fiduciaries of, of
256
00:14:19,640 --> 00:14:22,720
responsibilities of the
servicers, they're, they're
257
00:14:22,720 --> 00:14:24,480
going to take any loan that they
have.
258
00:14:24,880 --> 00:14:29,000
And if you, they're most more
than likely going to put it out
259
00:14:29,000 --> 00:14:33,080
to the market via brokerage or
through an auction website.
260
00:14:34,080 --> 00:14:39,000
You, you may be a family office
or a wealthy investor or some
261
00:14:39,000 --> 00:14:42,840
relationship of that investor to
maybe get it handed to you.
262
00:14:43,160 --> 00:14:48,240
But but waiting around to get
that property is, is going to be
263
00:14:48,240 --> 00:14:49,960
fruitless.
You're going to be standing
264
00:14:49,960 --> 00:14:52,520
there.
So what I do tell people is this
265
00:14:54,520 --> 00:15:00,280
the way to acquire a property
before and CMBS before it gets
266
00:15:00,280 --> 00:15:04,880
to that auction block is to find
the current owner of the
267
00:15:04,880 --> 00:15:09,240
property who either is, wants to
get rid of it, wants to modify
268
00:15:09,240 --> 00:15:15,280
it or wants to do something to
it that that either maybe, maybe
269
00:15:15,280 --> 00:15:18,560
sell it and then work with that
current us.
270
00:15:18,640 --> 00:15:21,960
Because we're the ones that can
help open up that opportunity.
271
00:15:21,960 --> 00:15:24,200
Because then I'll tell you what
we do more specifically in a
272
00:15:24,200 --> 00:15:26,960
minute.
But we are the ones that you
273
00:15:26,960 --> 00:15:30,000
would talk to, to work with the
servicer and say, Hey, look, we
274
00:15:30,000 --> 00:15:33,600
have a new, we have a, we have a
property that's not doing well.
275
00:15:34,200 --> 00:15:36,240
They need equity.
The borrower's out of equity,
276
00:15:36,240 --> 00:15:39,360
but the but we have an investor
that's coming in and then, you
277
00:15:39,360 --> 00:15:42,240
know, I, we don't raise equity.
So you know, you guys bring in
278
00:15:42,240 --> 00:15:46,080
the equity in and that that the
investor will either come in and
279
00:15:46,080 --> 00:15:49,840
they'll be a a preferred equity
and then they and then they
280
00:15:49,840 --> 00:15:53,960
become part of the ownership or
maybe they come in and they
281
00:15:53,960 --> 00:15:58,000
modify the loan and and buy the
loan and buy and buy the asset.
282
00:15:58,000 --> 00:16:02,520
But the key is that we have to
and key figuratively is because
283
00:16:02,520 --> 00:16:06,720
we are unlocking this from being
stuck in CMBS service.
284
00:16:08,560 --> 00:16:13,360
Makes sense.
Yes and no.
285
00:16:13,560 --> 00:16:17,920
And the reason I say no is
because it feels like the
286
00:16:17,920 --> 00:16:26,160
recession we had in 2008 was the
result of selling debt and it
287
00:16:26,160 --> 00:16:31,160
all blowing up in our faces and
almost feels like that this is
288
00:16:31,160 --> 00:16:37,200
the same scenario.
Except, except, except the
289
00:16:37,200 --> 00:16:41,640
market now has so all the
investors that are sitting on
290
00:16:41,640 --> 00:16:44,440
the sidelines are sitting there
flush with cash.
291
00:16:45,240 --> 00:16:49,080
And that's the big difference.
The thing about the whole, I'll
292
00:16:49,080 --> 00:16:51,560
give you the best, the best,
the, the way to make this really
293
00:16:51,640 --> 00:16:56,680
relatable is remember the, in
the, in the residential market
294
00:16:56,680 --> 00:17:02,600
crash and you had a home and you
bought it for, you bought it for
295
00:17:03,080 --> 00:17:09,200
$100 and then all of a sudden it
is worth like $50 and you went
296
00:17:09,200 --> 00:17:12,440
in and you're like, Oh my God,
I, I might now it's coming due.
297
00:17:12,440 --> 00:17:14,319
I don't want to put more money
into this.
298
00:17:14,319 --> 00:17:15,839
And like I'm never getting out
of it.
299
00:17:16,400 --> 00:17:20,640
It's a similar situation, but
the difference is unlike before
300
00:17:20,640 --> 00:17:23,040
where you just had the, the
lender said, Oh, I got to sell
301
00:17:23,040 --> 00:17:25,440
this thing because I just got to
get my money because my bank is
302
00:17:25,440 --> 00:17:27,680
going under.
They don't, nobody has that
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pressure anymore because there's
enough, there's enough private
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equity out there in order to
absorb all of this.
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But people don't want to sell
naturally, right?
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I mean, if you think that you
have a good property and it
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needs more time, then you call
somebody like us to help
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navigate you through those
complexities of the servicing,
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because it's not.
I always give this example.
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If you were to go and we in, in
the two of us, we owned a, we
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owned a house, an apartment
building, a shopping center and,
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and Aviva and I have this, this,
this, this great center.
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And boy, we just lost a tenant
and we got it with, you know,
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you know, Woody Creek savings
alone, OK, and Woody and we know
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all the people there.
We love the people there and
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they call us and they like Mike
and Aviva.
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Sure.
Well, let me talk, this is this
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is Bob.
I'm going to talk to Sue and
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we're going to talk to Fred and
Frank and and we're going to
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then talk to Tina and they come
back and say this is what we're
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going to do for you because
you're such great customers.
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OK, well, what if we went to
1800 mortgage instead?
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And we're like, now what?
And I'm like, well, this doesn't
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get, you know, we're, we're,
this is not the guidelines
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you're, you're in.
You know what?
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In fact, we're, we're going to
just take your property or
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we're, we're going to we, we
need you to do this and X and we
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and this is the way we'll do it
or else.
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So you really need in my in, in
the world of what I do
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commercial mortgage-backed
securities.
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You need somebody like me.
I don't know what I'd be doing
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in my life.
If, if, if this is all I know,
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this is all I've done.
I have a, I've a, I've a person
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that he worked for 25 years as a
external lawyer and an an
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internal lawyer.
Bank of America closing the real
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estate loans from the legal side
working in large loan special
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servicing of working out these
loans.
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00:19:21,360 --> 00:19:24,840
I have another woman that spent
20 years at at Wells Fargo
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00:19:24,840 --> 00:19:28,160
working in CMBS special
servicing where she was the one
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00:19:28,160 --> 00:19:31,040
that you'd have talked to to
figure out how to do this.
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00:19:31,040 --> 00:19:32,800
So why do I have these people
around me?
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Because those and some other
specialists, when a borrower
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comes to me, I want to be able
to see the problem from every
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00:19:39,680 --> 00:19:41,040
angle.
I want to be able to look at it
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with a 360° view.
And then along with their
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00:19:44,920 --> 00:19:48,400
attorney, we can actually give
the borrower all the opportunity
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00:19:48,400 --> 00:19:50,920
they need to make an informed
decision.
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Michael, this has been a crash
course.
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00:19:57,400 --> 00:20:01,440
We've covered what CBS actually
is, why it's suddenly in every
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headline, and how borrowers get
stuck with the wrong servicer.
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We're going to pause here and
pick this up in Part 2, where we
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cover distress deals.
Where the opportunities are and
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what investors should actually
do next.
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If you're listening, make sure
to subscribe so you don't miss
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00:20:19,320 --> 00:20:24,200
Part 2 with Michael Cohen.
Trust me, it gets even better.
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We'll see you next week on
Commercial Real Estate Secrets.
