Much like the second quarter, we ended the third with continued optimism.

Despite having one arm tied behind its back (continued lockdown in major states like CA, NJ, NY), the US economy staged an unprecedented (and better-than-expected) comeback during the third quarter, posting a GDP growth rate of 33.1%.

Distress continued to permeate the market on the margins primarily confined to the retail (non-grocery anchored) and hospitality (non-resort) sectors. Capital investors licking their chops for buying opportunities continued to sit on the sideline, while others seeking some measure of return and safety focused on multifamily and industrial. The more intrepid investors gave suburban office a second look as many expected a post-COVID normalcy to include a return to the hub and spoke system for corporate occupiers of space.

Senior debt providers remained disciplined on leverage exposures to most asset class requiring an over-equitization or alternative structured capital to fill the gap. The old stalwarts – mezzanine loans and preferred equity – began to face new challenges from ground lease and C-PACE providers offering cheaper capital, albeit at the expense of senior lenders’ risk exposure.

On a personal note, we decided to return to the office for the sake of maintaining business continuity, corporate culture, and our sanity. Though it was different across our various markets (state requirements), for those that found themselves back among their peers it was a much-appreciated return to a semblance of normalcy. New hires were made and integrated into the various teams in manner that would have been impossible in a remote situation. We continue to seek out talented individuals with a yearning for growth, challenge, and human interaction.

– David Eyzenberg (Adjunct Professor at NYU Schack & UM Herbert Business School)