How I discovered the beauty of private debt – The Property Chronicle
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How I discovered the beauty of private debt

The Fund Manager

In the early years of my career, I wanted to start my own business. Stories of entrepreneurship in Silicon Valley captured my imagination, and in 1994 I took the plunge. In 2000 we sold our business to a public company, and promptly watched the stock we received in the acquisition drop by about 97% when the first internet bubble burst. I call this experience ‘the rollercoaster ride’ and it made me queasy, as I watched my net worth drop back to earth just as I had started a family and purchased our first home (with a mortgage).

I set out to find a business that I could learn from the founder, and being in Los Angeles, I stumbled into the commercial real estate investment field when I met a successful value investor named Sam Freshman. Once I realised that part of the job was researching and exploring cities and neighbourhoods, I was hooked. When the global financial crisis arrived, my mentor Sam began seeking opportunities to make short-term hard money loans to opportunistic real estate investors, as a low-risk way to generate income while remaining relatively liquid. Soon after that, I made some small loans to investors who were buying and renovating homes that had gone through foreclosure. In 2010 I started my first fund doing just this type of loan and little did I know that this modest undertaking would grow into the focus for the rest of my career.

After the GFC, banks largely walked away from making real estate bridge and renovation loans

Eleven years later and after originating about 1,700 loans, the bigger picture has come into better focus. After the GFC, banks largely walked away from making real estate bridge and renovation loans to investors, leaving that market to start-up non-bank lenders and private debt funds. Meanwhile, yields on all types of investments have continued to plummet to all-time lows, as shown on the chart below.

Historical yield from a traditional portfolio of 60% equities and 40% bonds






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