I work at a CBRE/JLL/C&W and am considering transitioning to the debt side of the business shortly. I sit by a bunch of guys who work in debt in various capacities. Two of the prominent guys work in debt placement/brokerage and loan/portfolio sales advisory, respectively.
I am familiar with what a producer in debt placement does, but am not totally clear on how loan/portfolio sales works. Can someone explain? Furthermore, is one part of the business better in terms of deal exposure/exit opps? Thanks!
You usually sell/ the note on non performing properties. It is cool but niche, hard to transition the higher up you get, you get a very specific skill set.
Thanks for the reply. Makes sense- although when I research their deals, it seems they also work as typical debt brokers (recently arranged financing for a Blackstone office portfolio) in addition to loan sales. Perhaps they have their hands in everything.
There are brokers that play in all of these spaces and have separate teams for each. To be clear though, debt placement and loan sales are totally different worlds.
To further the poster's point above, the loan sale doesn't necessarily have to be non-performing. Sometimes a bank/debt fund/mortgage REIT may have a concentration issue (i.e. too many loans in one geography and/or product type) and just needs to get rid of some performing loans to cure the imbalance (or new portfolio balance they are looking to have per changes in strategy). In these cases, the loans typically sell close to or at par. I'm not well versed in this but as far as I understand the valuation of a loan sale is definitely part art part science and really comes back down to valuing the collateral itself. The problem, as you'd expect with a non-performing property/loan, is that the quality of information you get is much shitter and sometimes you are working with bare bones info which makes it difficult to arrive at a value. It is definitely an interesting and specialized skillset as mentioned, but there are acquisitions shops that purchase notes as well as properties and are versed in both. At the end of the day, it is just a different means of acquiring the keys. To expand on this though, if they do want to take the keys (i.e. an opportunistic shop as opposed to just another lender buying the loan for cash flows), there is a whole slew of hoops and processes they have to get through to actually take ownership of the property and that is also a very specialized skillset.
i know debt placement guys who have tried to do loan sales here or there but it didn't sound like a raging success.
Very interesting- thank you for clarifying! Would you agree with the poster above in that the skill-set is less transferable?
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