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.

Show Notes

00:00 Meet Michael Comparato

01:17 Real Estate Roots

03:25 Early Lessons and Purpose

03:35 Hurricanes And Tenants

05:05 Story Over Spreadsheet

06:49 Why Origination Wins

08:43 Family Business Ethos

10:59 Trust And Transparency

11:27 Lending Through Covid

13:05 Structuring For Uncertainty

13:56 Boom Times Underwriting Shifts

16:54 Crowded Class A Trade

18:19 Are Values Fair Today

21:46 Operator Shakeout

23:59 Scale and Market Structure

26:16 Banks Pull Back Credit

27:59 Private Credit Fills Gap

29:24 Who Holds Last Dollar Risk

29:29 Returns and Competition

30:35 Competition Compresses Yields

30:58 Maturity Wall Myth

33:05 How Investors Bucket Credit

36:04 Wealth Channel Opportunity

37:49 Why Credit Beats Equity Now

41:58 Megatrends and AI Fears

44:40 Shelter and Multifamily Focus

46:11 Community and Social Real Estate

48:16 Real Estate Constant Evolution

51:06 CRE Credit vs Direct Lending

53:21 Final Wrap and Outro

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Benefit Street Partners' Michael Comparato - the opportunity in commercial real estate credit

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Benefit Street Partners' Michael Comparato - the opportunity in commercial real estate credit