Podcast Transcript
Speaker 1:
Welcome to Real Wealth Real Health, the show that empowers you with insights, information, and inspiration to achieve your version of financial wellness. Learn how to balance living a full life today with planning for the future. This podcast is brought to you by Alpha Investing, a real estate centric, private capital network that provides exclusive investment opportunities to its members. And now here are your hosts, AdaPia d’Errico and Daniel Cocca.
AdaPia d’Errico:
Hello, and welcome back to another episode of Real Wealth Real Health. Today we are joined by Todd Friedenberg. Todd, as some of you may recall joined us about a year ago, right as the pandemic hit the world and the real estate markets. With his extensive background in the commercial mortgage industry, Todd provides very important insights into what is going on in the debt markets and how that affects investing in real estate.
AdaPia d’Errico:
Really quickly, Todd’s background. Todd is the president and principal of Q10 Vista Commercial Mortgage Group with over 30 years of commercial real estate experience in both debt and equity financing, brokerage and valuation consultant. He was previously vice president with GE Commercial Finance and Column Financial of Credit Suisse, and has served as a commercial mortgage banker since 1990 with various firms in Nashville. Todd has originated over a billion of debt and equity over his career.
AdaPia d’Errico:
In our conversation today, we touch upon what did lenders do? Since last year we talked about what are lenders going to do now that the pandemic has hit. We also talk about the way that different sectors within real estate haven’t been impacted. What’s gone on for the past year? Then we jumped into a deeper discussion about agency debt, what is it? Talking about mezzanine debt, understanding that, as well as the newer vehicles like debt funds, which are sometimes used in lieu of agency debt. So in general, it’s a very deep discussion about different ways of structuring debt for commercial real estate projects.
AdaPia d’Errico:
Finally, we touch on interest rates and inflation. What is going on with those? What might happen economically? How they impact commercial real estate industry and investing. This is an important conversation to be having at this time, as we revisit what’s gone on in the past year and take a look at what might happen on a going forward basis. Todd, welcome back to the podcast. Thanks.
Todd Friedenberg:
Thanks. Glad to be here.
AdaPia d’Errico:
Last year, when we had our first episode with you, it was right after the pandemic had reached a bit of a peak. Everything was shut down, the property and real estate markets were certainly shut down, everything was frozen. And we talked a lot with you given your background about what was the expectation of what lenders would do. So I think a year on it would be great to get your perspective on what did lenders actually do? What did the pandemic really do to the commercial real estate market from your perspective?
Todd Friedenberg:
Well, boy, where to begin. I don’t think certainly every sector was impacted, but when we first started talking about this, it was right at the beginning of COVID and everything was shutting down. And I had borrowers calling me asking to talk to lenders specifically, borrowers that owned retail centers, predominantly some hotels and on a few occasions and multifamily, but really mostly retail and hotels. They were certainly concerned over how it was affecting their income.
Todd Friedenberg:
So they wanted to reach out to the lenders and ask for some relief in the end. Really, I would lump in our Q10 Capital group where we service. I think it’s somewhere around 12 or $13 billion of predominantly life insurance company and some CMBS loans. It was such a small percentage of loans that we actually had to work out some really relief in the form of interest, only payments. There were virtually no forbearance.
Todd Friedenberg:
For about 30 to 60 days, it was a little scary, but then it just sort of evened out. I don’t think that’s the case and a lot of CMBS properties, which we just didn’t see because borrowers were dealing directly with CMBS servicers. So that was a little tougher, especially on the hotel front, but in a nutshell, it was certainly problematic, but it wasn’t near the amount of issues that we had expected to experience. I would say that would be not just my experience locally or throughout the Southeast, but through our whole Q10 Capital group. We just didn’t see the huge amount of issues that we thought might be forthcoming.
AdaPia d’Errico:
What do you think was the factor or a set of factors that allowed what everybody was so afraid of not to happen? There was a huge amount of fear and like you said, there were obviously some properties, hotel, and shopping center retail was hit the hardest, but I think everybody was really concerned about, even on the multifamily side and will people pay their rents. What are some of the factors that basically didn’t come true because we’re busier than ever? People are out there doing deals, buying transactions. What changed to allow the market to basically roll forward?
Todd Friedenberg:
Well, I’m not so sure, but it was a change. I think first and foremost, the structure of most of these loans, at least on the life company side and even on that agency Fannie and Freddie side were… Since the prior recession when we came out of 2009, 2008, 2009, underwriting was a much more stringent. I think loans were more conservative. So from the get-go you had a much better base where you weren’t over leveraged. And so that clearly helped to keep a debt service coverage ratios, although they did drop, but still above one and in most cases, well above that.
Todd Friedenberg:
The issue with retail, you had big-box retailers that basically were not paying rent and negotiated deals or in some cases just told their landlords, we’re just not paying rent. It took a while to work through that, but it was never significant enough, at least in the loans that I saw because I’m sure there were plenty out there that maybe didn’t make it because they had two or three big-box retailers that weren’t paying rent. And maybe there was a shortage of cashflow in the partnership and they couldn’t keep it afloat.
Todd Friedenberg:
But for the most part, there was enough money there and there was… The leverage is low enough that they were able to make it through. I can’t really speak to hotels because I don’t have enough in my portfolio or any of that. Really, I have personal experience with where they got into trouble, but there was not the near amount of foreclosures or issues on hotels. You can see that now and the fact that there’s really not… Everyone thought they were going to be all these opportunities to go in and buy these hotels that just didn’t make it and the market just isn’t seeing that, at least not yet.
Todd Friedenberg:
I know in Nashville throughout COVID, they were building new hotels. So in markets like Nashville that has experienced really tremendous growth and will continue to do so as we come out of COVID, those hotels I think, are going to do fine now for in other areas of the country where that may not be the case. I think we’re going to see issues, but I don’t think they’re going to be the major issues that the market foresaw at the beginning of this.
Daniel Cocca:
Man, I think what we saw happen at the beginning of COVID is kind of what happens anytime, some externality like this comes into play, even if you just think about how people fly around the country. In March, people were canceling flights, they weren’t getting on planes. Then in April there was like one person in row, and then there was no middle seat and the last flight I was on was packed to the brim.
Daniel Cocca:
I think that is the case that the analogy, at least for the asset classes that have fared well during the pandemic multifamily being one of them. Particularly, can class B workforce housing, where collection rates have remained where they have been historically. But then if we transitioned to the other side, the hospitality, the retail, even office, when you’re in a lender’s shoes, how are you now changing the way you look at an underwriting a retail deal? Is it just about adding in more reserves? Are you hesitant to provide as much leverage? Do you question the kind of cashflow and revenue projections? What’s the new state of play for those asset classes that we’re on the wrong side of COVID?
Todd Friedenberg:
Well, I think, and I’ve experienced a few recently on some refinances and new finances that we’re working on. For the most part, at least my life company lenders, and we represent 30 or 40 different lenders out there. So I could probably say as a life company market as a whole is much more conservative. I would say retail, which by the way, was not a favorite product prior to COVID either because retailer was experiencing some issues even prior to COVID with store closures and reduction of store sizes, and of course, with the Amazon, the Amazons of the world. It’s just affecting the brick and mortar retailer.
Todd Friedenberg:
So we were already seeing somewhat of a transition in retail. But to answer your question, Dan, I think the underwriting is much more conservative. There is typically some sort of reserve, maybe not a debt service reserve that we’re seeing on multifamily, which we can get to that in a minute because I think that will eventually phase out in the near term, but just lower leverage is the biggest thing.
Todd Friedenberg:
I think from a standpoint of, if lenders were maybe doing 70 to 75% on retail pre COVID, now, they probably don’t want to go more than 65% in most cases. If you’re a grocery anchored retailer with some pretty solid tenants, then I think that’s going to be the most favored retail product, but on anchored retail and just big box, non-grocery anchored retail is going to be much more difficult to finance at a higher leverage. And spreads are higher on that product type, significantly higher than multifamily or industrial.
AdaPia d’Errico:
Let’s talk about that. Let’s talk about multifamilies and what was going on in that market. Because I know that when we were able to finally start investing again, because we froze two for several months, then all of a sudden there was this at a minimum 12 month interest reserve. So can you talk about that a little bit? What is it, why did they put it in place? Just so that our listeners are getting a good sense of what it’s all about because I know a lot of our investors started to see that line item in the underwriting and it’s a big chunk of money. So can you talk about that a little?
Todd Friedenberg:
It is. It’s a decent size reserve, especially if it’s a much larger deal. So really Fannie Mae and Freddie Mac were the ones that we’re really seeing this on the agency side. At first, it was kind of a 12 to 18 month, what they called a COVID or debt service reserve. And at the end of that period, if you were maintaining for the prior three months, a debt service coverage of say, 120 or 125, then they would release the reserves. We’re just coming into that period now, if you financed right back in April or May, where we’re going to see the effect of that.
Todd Friedenberg:
But in general today, we’re seeing still a debt service reserve anywhere from six to 12 months. I’m not seeing many on the 18 month side. If the loan amount is more than 6 million, it’s typically going to be six months, six to eight month reserve and under that typically 12 months. And of course you can borrow that, it factors into your leverage. And so a lot of borrowers are just borrowing that reserve, which they’ll end up getting back hopefully, within the six to 12 month term.
Todd Friedenberg:
It hasn’t really put a damper, I don’t think and certainly volume was down for several reasons and I would attribute part of that to the debt service reserve. But interest rates were so low, people were taking advantage of still financing. In the last, probably two to three months, we’ve seen spreads increase about 50 to 60 basis points, but rates are still sub four and I think valuable will be there. So that’s kind of the gist of what’s happening there on the multifamily firm.
AdaPia d’Errico:
And do you expect that the interest reserves will phase out or-
Todd Friedenberg:
Yeah.
AdaPia d’Errico:
… do you think people? Yeah.
Todd Friedenberg:
Yeah, definitely, they will. It’s a question of when, which is kind of the weekly question right now. I’ve got several agency deals I’m working on and it’s always the first question my borrower asked, is at what point should we wait? Should we do it now? And nobody knows and the agencies really aren’t given an indication. I think we’re going to see this debt service reserve, at least through probably summer or even through the fall before we see that go away. As long as the demand is still there, I don’t think that there’s a reason for them to say, Hey, we’re going to not have it.
Daniel Cocca:
So Todd, can we take a quick step back? I know we often talk about debt financing in very specific detail. But as I’m an investor and I get an offering memo from Alpha and I look at the summary of the debt. I’m usually going to see either Freddie Fannie agency Debt or I’m going to see some type of debt fund. Can you just talk a little bit about the core key characteristics of each and maybe some of the pros and cons and why a sponsor might choose one over the other rate aside?
Todd Friedenberg:
Sure. And I think I don’t have a lot of experience on the debt fund side, but so let’s push that one aside for a minute, but I think that it really depends on the product and what the objective is. If it’s a long-term hold, then they’re trying to typically leverage up and locking up a low rate for a long period of time. So agency debt, if it’s a multifamily deal agency debt’s very attractive. Life company debt is attractive as well, if maybe they’re not going to leverage up as much.
Todd Friedenberg:
They both have similar prepayment or requirements in terms of yield maintenance, so there’s always going to be some sort of a prepayment penalty. Then shorter term, you’re not as impacted by that prepayment penalty and rates are still low where you can get some interest only. Typically, if they’re doing a three or five-year or a day off, sometimes you can get interest only for that entire term and especially on a value add transaction where you’re going to go through leasing the property, renovating, leasing it out.
Todd Friedenberg:
So there’s an advantage to having those interest only payments during that period before you put permanent debt on it or for the… Maybe they plan on selling it down the road, so they don’t want to get hit with a pretended family. I think that’s probably the first thing that a borrower or sponsor is going to look at in terms of what’s the time and how long are they going to be in the deal. And I think that’s going to factor into which way they go on the debt.
Daniel Cocca:
Yeah, that definitely makes sense. I think what we’ve seen across our portfolio recently, particularly sponsors who are looking at those three to five-year terms, they seem to be favoring debt fund execution and at present.
Todd Friedenberg:
Yeah. And that makes sense because a lot of these debt funds, they can go in and actually borrow, as opposed to doing kind of a bank loan with a bridge or a bridge loan and then some sort of mezzanine piece. You could do it all within the debt fund. You might pay a little bit more than maybe an agency or life company, but you’ve got more flexibility with that debt fund, which makes a lot of sense, especially when you’re going to know you’re going to exit that deal or put some different type of debt on the deal within a shorter three to five-year term.
Todd Friedenberg:
Most of the deals that I’m involved with are longer term, which is why I don’t have as much experience on a debt fund side because we’re doing typically, especially with interest rates where they’re at, I’m doing 10 to 20-year deals and we’re locking in that rate, non-recourse in most cases for up to 20 years or more in some cases even more.
AdaPia d’Errico:
So question, just so that we can get into it a little bit, who raises a debt fund? Where does that money come from?
Todd Friedenberg:
Well, I think probably most of the debt funds that I’ve been with have some sort of institutional component. It may be a life company or someone along the way that’s investing a significant amount of money into the fund, but then it can also be high net worth individuals, family offices, things like that, that are contributing to do investing in that fund.
AdaPia d’Errico:
Right. And they’re just looking for the interest income out of it for the most part.
Todd Friedenberg:
Yeah, absolutely. It’s just like a real estate deal. It’s just on a debt deal as opposed to… They’re actually owning the real estate. They own the debt.
AdaPia d’Errico:
Right, right, right. You mentioned something before you mentioned a mez piece. Can we just touch on that and expand on it just a little bit? What does that mean? What is mezzanine debt and when it’s used in a commercial real estate structure in a capital stack, what does that do in terms of the risk profile of a deal?
Todd Friedenberg:
Well, it depends on the deal, but let’s take a multifamily deal, for example. A lot of times we’ll see leverage up to let’s say 75% and maybe they’re trying to get to 80. So that extra 5% piece on the capital stack might be a mezzanine debt that is going to be a higher interest rate. But as it factors into the overall deal, it’s such a small component that you might have, let’s say your agency debt’s at three and a half or 3.75, and you do a mez piece that 10%, your blended rate is still pretty low.
Todd Friedenberg:
It does increase the risk because you’ve got additional debt to service, but typically the mez piece is a much shorter term and it’s going to get taken out along the way, either through a refinance or a sale. Most mez debt is two to three years and the mez lender typically wants to get out as soon as possible. So those deals are structured with fairly low risk, again, depending on the deal. But if they’re not the first loss piece or they are the first loss piece. So they want to be sure that they got plenty of coverage and it’s not over leveraged in order to get paid back.
AdaPia d’Errico:
Right. And tendentially, is it secured or unsecured?
Todd Friedenberg:
Well, they’re in a third, typically in a second position behind the primary lender. So it is to a certain extent, but if something goes South on the deal and there’s not enough to take out the first lane, then there may be nothing left on the back end.
AdaPia d’Errico:
Right. And I only bring it up because I’ve seen that a little bit and for any investor that’s listening and that is seeing, and I think it’s important to understand that that mezzanine is a debt position and it comes ahead of equity, and to like be careful of what your total leverage is on a deal, because it might look like 65 on your first lien and then you have mez, that’ll take it to 80, 85. I think it’s just really important for people to understand that the purpose of it and how it can actually impact an equity investor and their risk in a deal.
Todd Friedenberg:
The purpose of the mez debt is maybe you’re doing… It’s a value add transaction, and you’re going to go in and do some renovations and increase rents. So as you’re renovating units and leasing those units up at a higher rent, your leverage is actually coming down or your debt coverage is going up. As you work through the renovation and the lease app, your risk goes down. And as long as that’s going to plan then in most cases… I’ve yet and I’ve been doing this a long time. I’ve not seen a deal go South that had some mez debt on it, but most of the mez debt that we’ve done is been a lower leverage, typically not more than 75 to 80% on the debt.
AdaPia d’Errico:
Interesting. Thank you for that. I just thought it’d be interesting to dig into different types of debt and deals because we’re seeing that. I’d like to switch gears a little bit and talk about probably questions that are top of a lot of people’s minds, especially these days, as we saw the stock market, take a bit of a wobble with inflation fears that came through the media. Can we talk about that a little bit from your perspective and what you’re hearing and seeing? Specifically, if we can start with, if inflation goes up, if when and how much, how does that really affect real estate investors, real assets, and specifically commercial?
Todd Friedenberg:
Well, that is the real question. It’s not if, it’s when because I think with all the money, now, all the stimulus money coming in to the economy and interest rates have been just at rock bottom. I think ultimately we’re going to see that inflation at some point. I don’t think it’s going to be hyperinflation that maybe some people are projecting, but I am not an economist. I’m far from it. But in general, I think that the real estate market is in a fair well throughout what we might consider an inflationary period in the next few years.
Todd Friedenberg:
I really don’t think we’re going to see that until 2023 maybe, and I’m not sure what that’s gonna look like. But I think the economy will continue to do well interest rates. The fed’s going to try to keep interest rates under control and rents will probably continue. We’re going to see an increase in rents as the economy rolls on, especially coming out of COVID. So I don’t think we’re going to see a negative effect of inflation on real estate going forward.
AdaPia d’Errico:
Does it normally or not? If inflation goes up, asset values go up as well. So is there a correlation with interest rates, just from a technical, knowledge-based perspective? If interest or I’m sorry, if inflation goes up, do real assets also rise in value normally?
Todd Friedenberg:
It depends on the type and amount of inflation. But I think if inflation is causing rental rates to go up, whether it’s a multifamily deal or a retail deal or an industrial data, whatever the case may be, then yeah. But yes, that would be true, but I think you’d also need cap rates to stay the same and not see, or in some cases we’re even seeing some cap rate compression still. So I think if you look back, and it’s interesting, I looked at a chart recently that went back 10 years and looked at the 10-year treasury yield over those 10 years and interest rates in general. And the spread is pretty much stayed the same. We’ve seen little ups and downs.
Todd Friedenberg:
I think we’re going to continue to see that. So I don’t think we’re going to see cap rates necessarily inflating through an inflationary period, but again, who knows how much inflation we’re going to experience and it’s just hard to say. I don’t know enough about the economy and economics in general and inflation to sound like I’m intelligent enough to know what’s going to happen with inflation. But in general what I’ve seen over the past 20 or 30 years, I think we’re going to be in okay shape, borrowing any type of tax changes or anything like that, which certainly would affect real estate.
Daniel Cocca:
As someone who has been in the space for a long time, historically, customarily, interest rates and cap rates have moved together. And there is a period in the last few where we diverge from that for a bit. But given where interest rates are today, how do you… And really the only direction that they can go being up, do you expect to continue to see a divergence between cap rates and interest rates? Do you think they’ll move together unpredictable? What’s your perspective?
Todd Friedenberg:
Well, the easy answer would be, it’s not unpredictable since you throw the word out there, Dan. But yeah, I really think that we’re going to see in the long run, a similar spread. That’s why if you go back 10 years and look at it, it’s been a pretty similar spread between the two with some blips here and there. And especially in the last four years, we’ve actually have seen some cap rate compression, but I feel like that’s going to be the case going forward, at least for the next several years that we’re going to see that same spread.
Todd Friedenberg:
I think interest rates are going up. I don’t think we’re gonna see huge increases in rates. I think over the last, since really the beginning of the year, we’ve seen a pretty significant increase in treasury yields, which the markets built in what they think is going to happen with inflation. And we’ve actually seen it settle back and a little bit over the last couple of days.
Todd Friedenberg:
A couple of people I’ve talked to recently economists that some life companies that we work with are basically saying that hey, it’s… That inflation had just built in right now to where we are on the 10-year treasury. And some are saying maybe by the end of the year we might see a 10-year treasury yield around 1.75 to two or at 1.50 right now.
Todd Friedenberg:
So I think we’re going to just bounce along between there for the rest of this year. But going forward, it’s so hard to say. There’s so much of this new stimulus package right now and the big question is, are people going to go out and spend that money and juice the economy? Or are people going to save for a rainy day and fear that COVID may not be over and they may have to face this again? So I just don’t know where we’re going to have from here. But I think we’re going to find out fairly quickly once they get this stimulus money out and then we see how fast it trickles into the economy.
AdaPia d’Errico:
Yeah. I think that’s like you’re saying those are the questions and that on everyone’s mind Even as we at Alphas, we’re looking at deals that our sponsors are bringing in. There’s a lot of activity and people we’re still betting on the multifamily market. And I often wonder, because I’ve seen a couple of articles about this and okay, let me just see really quickly. It was the CFPB talking about housing insecurity. So the Consumer Financial Protection Bureau, and I’m just saying that there’s still a lot of people that haven’t paid their rent.
AdaPia d’Errico:
So it was saying here, roughly 28% of residents in manufactured homes, 18% in multifamily and 12 and single family homes as renters are behind on their housing payments as of December 2020. And we still haven’t seen that fall out because they haven’t yet needed to pay. Is any of that priced in into the markets, into the way that people are thinking about collections and then also on a going forward basis, especially when we’re doing any kind of a value add where the idea is to raise rents and you bring in new people. So what are your thoughts on that?
Todd Friedenberg:
Well, I think it’s hopefully more of a short term problem, but it’s usually the first question that one of my lenders will ask is hey, let’s look at what have the collections been through COVID and especially the last 30 to 60 days. So it’s an issue when it’s at the forefront of underwriting and which goes back to this COVID reserve, which is the whole reason why they put that in place specifically, because they know that there are some tenants that can’t pay the rent.
Todd Friedenberg:
I think that there’s enough demand out there that I hate to say it, that if people can’t pay their rent and they have to leave that that space will get filled up really quickly still. So that will continue. And I think we’re going to maybe see a little bit of blip there in terms of what happens with some of those tenants. But again, that’s why that debt service reserve has been there and that’s part of the reason why they’re going to continue to keep that in place specifically, on the multifamily front.
Todd Friedenberg:
But overall, and maybe this is a change of subject a little bit, but I think that when you look at commercial real estate, last year, transactions were down significantly because of COVID. So I think I was reading something recently, it was like 30 or 40% from the prior year in terms of actual transactions and the same on the lending front. I know that from a life company standpoint, the Mortgage Bankers Association did at their last survey known origination volume was down about 30%. This is on the commercial side.
Todd Friedenberg:
When I talk to my lenders, they all were down from the prior year. So I think coming out of COVID, real estate is really well positioned right now to have a pretty good comeback. And especially given the investment alternatives. So returns are strong and we’ve not seen cap rates go up and the big question is going to be, as interest rates do go up, what happens to the cap rate? Are we going to see that remain the same? And I think we’ve already addressed that.
Todd Friedenberg:
I think there’s a lot of good news on the horizon coming out of COVID right now for commercial real estate. And specifically still for multifamily and in cities that are seeing a lot of growth and on the industrial side as well, which are multifamily and industrial are probably the two favorite products right now, and with retail and hotels probably being toward the bottom. But I think there’s still plenty of opportunities out there and I think we’re going to see a lot of transaction volume over the next year or so.
AdaPia d’Errico:
Yeah. No, those are great insights. Those are great insights because for people who are… They’re wanting to invest, they know that they’re educated. They understand that real estate it’s good to have as part of your portfolio. And yet we hear a lot in the media, there’s a lot of conflicting information. There’s stock markets, there’s crypto, there’s volatility. There’s all kinds of things. So I really appreciate that grounded perspective on what’s going on and we’re seeing it too with so much transaction volume.
AdaPia d’Errico:
We’re seeing deals so many deals coming through and we’re really looking forward to bringing some of those out to our investor network. So all in all, it really sounds like, for people who really understand what they want in their portfolio, that it’s still a good time to be investing in real estate. And like you said, especially multifamily.
AdaPia d’Errico:
One last thing I wanted to touch on from a market’s perspective, because one of the biggest shifts has been the migration that was already happening before COVID. It just got exacerbated by COVID. It seems to me that there are simply more opportunities and more markets where you could potentially even get more aggressive returns because those markets were previously unknown on top. So are you seeing with your lending business a lot more activity in even tertiary markets let alone secondary? Nashville is top of the list these days. So what are you seeing from the market’s perspective?
Todd Friedenberg:
Well, we do a lot of business loan origination in Tennessee and throughout the Southeast. So all the same cities that you probably hear about at our kind of that the hot cities, Nashville and Charlotte and Austin, and those will continue and I think do very well. I’m just not as experienced on the tertiary markets and I’m not sure of what those outliers are, and I think they’re there.
Todd Friedenberg:
I’m just not seeing much activity there, I’m sure there is some. Most of my lenders want to be in those larger growth cities to begin with. So I don’t know that I have a great answer for that, just in terms of where those areas are. But as long as they, especially on the multifamily side, if you’ve got the right demographics, the demographic profile and enough people in that MSA, that’s where we’re going to still continue to see a lot of activity.
AdaPia d’Errico:
Would it be fair to say that if you’re an operator in going into a tertiary market or active there, you’re probably getting your lending from a local bank?
Todd Friedenberg:
Yeah, most likely in banks, depending on what part of the country you’re in banks have been pretty aggressive in terms of going, I don’t want to say aggressive in terms of leverage, but certainly in going longer term. Banks traditionally have been shorter term lenders and we’re seeing more and more banks do 10, or even in some cases, 15-year deals. Rates are still higher than some other lending sources like life companies or even agencies. But I think we’re going to continue to see that trend as well.
AdaPia d’Errico:
Great, great. Thank you. All right. I know you answered this last year, but I’m going to ask you again, it’s always a question we ask all our guests which is, what does wealth mean to you? How do you define wealth in your life?
Todd Friedenberg:
Well, obviously family comes first. And this is going to sound… Boy, you really threw that one on me. I have to think about that for a minute-
AdaPia d’Errico:
Todd, you don’t listen a podcast.
Todd Friedenberg:
Of course, I do. But yeah, I think family and is probably number one for me. Diversification, I think is, as we talk about it from a monetary standpoint, certainly I think diversification. So I feel lucky that I’ve been able to invest in real estate deals throughout my career. Some with Alpha and several other groups that I work with. I’ve been fortunate to have that diversification along with the stock market and all the other alternatives. But I think that that’s where real wealth is created is, is through that diversification, I think. And I think real estate provides a great opportunity for that.
AdaPia d’Errico:
Perfect, thank you. And I love your answer too. It’s like family. That was like the initial thing that came through because that’s what’s like so meaningful. So that’s a beautiful, beautiful answer. And thanks also for defining wealth along the lines of real estate. Like you said, you’ve been in it for a long time and you understand its value. So it’s great for everybody else to hear that as well. So thank you so much for spending some time with us today and really getting into all things, lending and markets and inflation, and one year into the pandemic and we’re going strong. So thanks for all your time today and all your insights.
Todd Friedenberg:
Well, thank you guys. I look forward to circling back and six or 12 months and seeing if anything, I said made sense, but at the end of the year, but hopefully we keep rocking along. So I enjoyed the conversation.
AdaPia d’Errico:
Awesome. Thanks, Todd. Thanks for tuning in to Real Wealth Real Health. We hope that you’ve enjoyed today’s episode and found it both informative and insightful. We welcome all your questions and your feedback about today’s episode, and especially we welcome your questions about specific topics that you would like us to cover. So shoot us an email @podcastatalphai.com. And if you have a moment, we really appreciate ratings and reviews as it helps us grow our online community and our interactions with you.
AdaPia d’Errico:
We’ll also be linking to a number of relevant articles on topics that we might’ve touched on during our conversations. Some of them are broad. Some of them are technical, but we’re always aiming to provide information that helps you better understand the mechanics of building this healthy financial foundation, especially if you’re looking to do this with real estate.
Speaker 5:
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