Alternative Lenders Will Benefit From Maturities Wave

LADERA RANCH, CA—Alternative lenders such as Money360 will take on an even bigger role as loans from traditional lenders come due and no longer underwrite for those programs, Ken Gaitan tells GlobeSt.com. Gaitan, who was recently hired by the firm as regional director, Western region, is a commercial real estate finance veteran who brings nearly 30 years of CRE experience to his role, with specific expertise in originating bridge and permanent small balance loans, generating pipeline development and asset management. Over the course of his career, he has originated and closed more than $3.5 billion in commercial real estate transactions.

Gaitan has served in senior production/management roles for such institutional firms such as Bank of America, Merrill Lynch, CBRE and Newmark Grubb Knight Frank, as well as emerging companies such as Thorofare Capital, PennyMac CREF and Johnson Capital Express. We spoke exclusively with Gaitan about his new role and why he is now attracted to a more entrepreneurial venture.

GlobeSt.com: What do you hope to accomplish in your new role with Money360?

Gaitan: I'm going to continue to help the firm build the originations platform, primarily through originating business myself. This ultimately grows into having a team I run. Having been a producer/manager at some of the noteworthy spots in my career, I enjoy that. Companies like player coaches that are not just overseeing, and leaner companies the new normal, so that's really what I'm focused on. I want to continue to grow what I've already started. The company is early in evolution, but I'm excited about it.

GlobeSt.com: Why were you attracted to a more entrepreneurial venture versus more formal institutions (e.g., Bank of America)?

Gaitan: It really goes back to business school for me, when I was in USC's entrepreneur program. Entrepreneurs have always been interesting to me, and the challenge of building something is a huge driver for me. Emerging firms like Money360 allow me to apply solutions to the marketplace. I've seen traditional lenders through the cycles of my career, and I love the institutions, but now I want to help emerge an emerging company like Money360. The entrepreneur program is a great way to study; it's more practical.

GlobeSt.com: How do you see companies like Money360 impacting the marketplace moving forward?

Gaitan: The marketplace will continue to be dynamic, especially in the small-balance space (sub-$15 million or sub $10 million. You can navigate the market more nimbly than institutions can. There's a clear advantage for firms like Money 360 as far as the marketplace goes.

GlobeSt.com: What else should our readers know about the alternative-lending marketplace?

Gaitan: Alternative lenders will take an even bigger role as we continue through this time we've all read about with loan maturities in 2015, 2016 and 2017. Certain markets out there haven't had their fundamentals recovered to the level they need to, especially given the reality of CRE finance being financed over 30 years or interest only, with little amortization of principal and limited increase of ROI. There's more conservative underwriting going on at the bank and investment-bank level; we're seeing a flight to conservative underwriting by banks and investment banks. When those lenders have maturing loans on their books, it will become more frequent that loans don't underwrite for their own program, so alternative lenders like Money360, whether on a bridge basis or a five-year fixed, will give borrowers very good weight to refinance a maturing loan. In the last cycle, we saw a lot of folks that ran into trouble with maturity faults, and they didn't have sources to take loans out. I saw a lot of that at Bank of America: the property was good, but they couldn't find a lender to take out a maturing loan. We may see this again with the current and upcoming wave of maturities.

LADERA RANCH, CA—Alternative lenders such as Money360 will take on an even bigger role as loans from traditional lenders come due and no longer underwrite for those programs, Ken Gaitan tells GlobeSt.com. Gaitan, who was recently hired by the firm as regional director, Western region, is a commercial real estate finance veteran who brings nearly 30 years of CRE experience to his role, with specific expertise in originating bridge and permanent small balance loans, generating pipeline development and asset management. Over the course of his career, he has originated and closed more than $3.5 billion in commercial real estate transactions.

Gaitan has served in senior production/management roles for such institutional firms such as Bank of America, Merrill Lynch, CBRE and Newmark Grubb Knight Frank, as well as emerging companies such as Thorofare Capital, PennyMac CREF and Johnson Capital Express. We spoke exclusively with Gaitan about his new role and why he is now attracted to a more entrepreneurial venture.

GlobeSt.com: What do you hope to accomplish in your new role with Money360?

Gaitan: I'm going to continue to help the firm build the originations platform, primarily through originating business myself. This ultimately grows into having a team I run. Having been a producer/manager at some of the noteworthy spots in my career, I enjoy that. Companies like player coaches that are not just overseeing, and leaner companies the new normal, so that's really what I'm focused on. I want to continue to grow what I've already started. The company is early in evolution, but I'm excited about it.

GlobeSt.com: Why were you attracted to a more entrepreneurial venture versus more formal institutions (e.g., Bank of America)?

Gaitan: It really goes back to business school for me, when I was in USC's entrepreneur program. Entrepreneurs have always been interesting to me, and the challenge of building something is a huge driver for me. Emerging firms like Money360 allow me to apply solutions to the marketplace. I've seen traditional lenders through the cycles of my career, and I love the institutions, but now I want to help emerge an emerging company like Money360. The entrepreneur program is a great way to study; it's more practical.

GlobeSt.com: How do you see companies like Money360 impacting the marketplace moving forward?

Gaitan: The marketplace will continue to be dynamic, especially in the small-balance space (sub-$15 million or sub $10 million. You can navigate the market more nimbly than institutions can. There's a clear advantage for firms like Money 360 as far as the marketplace goes.

GlobeSt.com: What else should our readers know about the alternative-lending marketplace?

Gaitan: Alternative lenders will take an even bigger role as we continue through this time we've all read about with loan maturities in 2015, 2016 and 2017. Certain markets out there haven't had their fundamentals recovered to the level they need to, especially given the reality of CRE finance being financed over 30 years or interest only, with little amortization of principal and limited increase of ROI. There's more conservative underwriting going on at the bank and investment-bank level; we're seeing a flight to conservative underwriting by banks and investment banks. When those lenders have maturing loans on their books, it will become more frequent that loans don't underwrite for their own program, so alternative lenders like Money360, whether on a bridge basis or a five-year fixed, will give borrowers very good weight to refinance a maturing loan. In the last cycle, we saw a lot of folks that ran into trouble with maturity faults, and they didn't have sources to take loans out. I saw a lot of that at Bank of America: the property was good, but they couldn't find a lender to take out a maturing loan. We may see this again with the current and upcoming wave of maturities.