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
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
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
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
A Word from Our Sponsor, UltimusThis episode of Alt Goes Mainstream is brought to you by
Ultimus, the full-service fund administrator and transfer agent powering asset managers in private and public markets. As alts go mainstream, you need real expertise to handle complex fund structures, connect with key distribution partners, and handle sophisticated compliance, reporting, and transparency demands.
That’s Ultimus: high-tech, high-touch solutions for over 450 clients and 2,500 funds with $775B in assets under administration. Backed by an expert team of over 1,200 employees, they place client service at the core of their business, helping you navigate complexity during your fund structuring or launch and then supporting you through every stage of growth. Whether you’re already in the market or thinking about entering private wealth, you can trust their team’s deep expertise in retail alternatives to help you reach your goals.
We thank Ultimus for their support of alts going mainstream.
What is Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets?
Alt Goes Mainstream podcast is the place to turn to for interviews with some of the brightest and most experienced minds in the world at the intersection private markets and wealth management. AGM dives into investment strategies like private equity (PE), private credit, venture capital (VC), secondaries, GP stakes, infrastructure, real estate, wealth management, and comprehensively covers tools and frameworks for approaching private markets, such as asset allocation, evergreen funds, model portfolios, and more. For anyone looking to invest into private markets (from experienced wealth managers to family offices to the individual investor looking for a more diversified investment portfolio), you’ll hear inside stories from executives and founders at some of the world’s largest financial institutions, alternative asset managers firms, and wealth management firms. More than a personal finance podcast, Alt Goes Mainstream dives deep into trends, investment strategies, firm building lessons, and innovative technologies that are enabling investors to access private markets.