Welcome back to the Alt Goes Mainstream podcast.
Today’s episode brings commercial real estate credit investing to life with someone who has real estate in his blood.
Michael Comparato’s grandfather started building single-family homes in upstate New York in 1946. He built his first shopping center in 1958. Michael was born into a family where he was on construction sites from a young age. At 13, he was doing landscaping. At 15, he was hanging drywall.
Today, Michael is a Senior Managing Director, Head of Real Estate and Portfolio Manager with Benefit Street Partners, as well as Chief Executive Officer of Franklin BSP Realty Trust, Inc (NYSE: FBRT). He also serves on the US Executive Committee.
Prior to joining BSP in 2015, Michael was Head of U.S. Equity Investments at Ladder Capital. Before that, he was President at Bank Atlantic Commercial Mortgage Capital.
Benefit Street Partners is part of Franklin Templeton’s family of specialists in private markets. BSP is a specialized private credit firm with over $92B in AUM. The firm manages a wide range of private credit strategies, including direct lending, special situations, commercial real estate debt, infrastructure debt, asset-backed finance, structured credit, and liquid credit. It also manages a non-traded Business Development Company and publicly-listed mortgage REIT.
Since BSP was acquired by Franklin Templeton in 2019, it has partnered with the $1.7T investment manager to expand how it structures various products and funds, enabling more access to the private credit asset class for wealth investors.
From his perch as the Head of BSP’s Real Estate business, Michael has the perspective of how one of the industry’s scaled real estate investment firms is approaching commercial real estate credit and where the firm sees opportunity.
Michael and I had a fascinating conversation about the evolution of CRE credit and why now might be an interesting time in the CRE credit space. We covered:
Why CRE, why now.
What bank retrenchment means for CRE credit investors today.
The relative resilience of multi-family.
The maturity wall myth.
Is the “extend and pretend” activity a reality?
How AI impacts commercial real estate.
Thanks Michael for sharing your passion, wisdom, and expertise on commercial real estate credit.
A word from AGM podcast sponsor, Ultimus Fund Solutions
This episode of Alt Goes Mainstream is brought to you by Ultimus, the full-service fund administrator and transfer agent powering asset managers in private and public markets. As alts go mainstream, you need real expertise to handle complex fund structures, connect with key distribution partners, and handle sophisticated compliance, reporting, and transparency demands.
That’s Ultimus: high-tech, high-touch solutions for over 450 clients and 2,500 funds with $775B in assets under administration. Backed by an expert team of over 1,200 employees, they place client service at the core of their business, helping you navigate complexity during your fund structuring or launch and then supporting you through every stage of growth. Whether you’re already in the market or thinking about entering private wealth, you can trust their team’s deep expertise in retail alternatives to help you reach your goals.
Learn more: ultimusfundsolutions.com or email info@ultimusfundsolutions.com.
We thank Ultimus for their support of alts going mainstream.
Show Notes
00:00 Meet Michael Comparato
00:40 Message from Ultimus, our Sponsor
02:05 Real Estate in His Blood
03:18 Hands On Early Lessons
03:41 Finance Meets Real Estate
04:13 Hurricane Shopping Center Stories
05:15 The Human Side of Property
06:13 Story Over Spreadsheet
07:50 Why Origination Beats Buying
09:48 Family Business Ethos
11:06 Relationships Still Matter
12:18 Trust and Transparency
12:49 Navigating Recent Dislocation
14:01 Lending Through COVID
14:47 Structuring for Uncertainty
15:32 Boom Times Underwriting Shifts
18:39 Crowded at the Top
28:42 Banks Pull Back, Private Credit Steps In
31:22 Banks Shed CRE Risk
32:06 Who Gets Paid for Risk
32:22 Euphoric Returns Fade
33:09 Competition Compresses Yields
33:40 Maturity Wall Myth
33:59 Extend and Pretend Reality
34:23 Taking the Asset Back
34:42 Post Hike Loanbook Shift
34:54 Hardline Loan Modifications
35:54 Real Estate Credit Allocation
36:46 Why Institutions Buy In
38:27 Equity to Credit Rotation
39:10 Wealth Channel On-Ramp
40:05 Why Real Assets Win
41:04 Why Now for CRE Credit
43:18 Credit vs Equity Horizon
44:15 Opportunity Set Today
45:27 WFH and AI Megatrends
48:30 Shelter Beats Disruption
50:08 Communities and Reinvention
52:23 Real Estate Constant Evolution
55:30 CRE Credit vs Direct Lending
58:03 Closing Thanks
Disclaimer: Alt Goes Mainstream is an independent podcast and newsletter focused on the private markets industry. It is published for informational and educational purposes only and does not constitute investment advice, financial advice, legal advice, or any other form of professional advice. Nothing contained herein should be construed as a recommendation to buy, sell, or hold any security or investment product. Some companies, individuals, or organizations featured or mentioned in this newsletter may be current or past sponsors of Alt Goes Mainstream. Sponsorship does not influence editorial coverage, but readers should be aware that a relationship might exist. The author may hold direct or indirect investments in companies, funds, or other entities mentioned in this podcast or newsletter.
