Here’s how one CRE veteran helps multifamily investors thrive

Volatility is becoming the new norm in today’s commercial real estate market. If it isn’t rising interest rates or shifting rental trends, then growing technology is the driving force that prompts investors to evolve. They also face significant pressure to become faster and more efficient. A change is needed. To help investors survive uncertain times, professionals must understand market trends and develop a game plan for success.

Meet Danny van der Reis, a commercial real estate (CRE) finance veteran and executive vice president of servicing and asset management at Arbor Realty Trust. In this executive conversation, van der Reis explores his experience in CRE finance, technology, loan servicing, and risk management. His words contain valuable knowledge that investors need to thrive in this market.

This conversation has been edited for length and clarity.

HW: You’ve had a long career in commercial real estate finance. What got you into this space and keeps you excited about it?

van der Reis: I have been interested in commercial real estate since I was a kid growing up in Amsterdam. It is at the intersection of business, banking, and the economy. The state of the CRE market provides a glimpse into the condition of the overall economy.

A stable commercial real estate market is an essential measure of the economy’s overall health. Commercial real estate finance is at the forefront of business, banking, and the economy, which excites me about this field.

HW: What’s one significant shift you’ve seen in the industry over the years, and how has it changed how multifamily investors approach financing?

van der Reis: Multifamily investors rely more on technology and data-driven decision-making. Some examples include predictive analytics and real-time data, to assess market trends, rental income potential, underwriting expenses, and asset valuations.

This evolution in the market allows investors to make more informed decisions based on actual data, thereby reducing their risk when investing.

HW: Arbor has an in-house loan servicing platform, which every lender doesn’t offer. What’s the most significant advantage of keeping servicing in-house for your borrowers?

van der Reis: Lenders with servicing platforms have a huge advantage over their competitors that do not have one. Sellers and servicers can be in continuous contact with their borrowers throughout the loan’s lifecycle. This creates an opportunity to get to know and understand clients’ financing needs.

Since the lender handles their loan’s origination and servicing, borrowers often experience quicker responses to issues. This equates to more consistent and specialized customer service, faster response times, and resolutions to any concerns. The overall satisfaction with servicing their loans is much higher than with a third-party servicer.

HW: Multifamily investors have had to deal with many market shifts recently. What trends are you seeing now, and how is Arbor helping clients with those shifts?

van der Reis: Multifamily investors continue to face challenging environments due to higher interest rates, operating expenses, and rental rate declines in many markets. Also, higher cap rates can lower overall real estate values. Arbor is helping our clients manage through these difficult times by proactively working with them to successfully implement their business plans. Under certain circumstances, we have provided interest rates or other types of relief, but it does require the commitment of additional equity.

HW: How does technology inform how you approach loan servicing and asset management? Are there any tech advancements you’re particularly excited about?

van der Reis: Technology has significantly transformed loan servicing and asset management by improving efficiencies, accuracy, and responsiveness, and it is expected to continue to do so.

van der Reis also goes into greater detail on ALEX, Arbor Realty Trust’s online borrower platform.

I am excited about our borrower platform — ALEX — which continues to be a significant value add for our clients, and it creates efficiencies for our firm. Borrowers can bypass emailing or calling the asset manager for basic loan information and go straight to our platform. We plan on significantly expanding the platform’s functionality to include payment processing, document management, financial reporting, borrower communications, submitting requests, and other servicing matters.

To end the conversation, van der Reis discusses his approach to risk management in today’s market.

HW: Even though the last few years have been rough, the reality is that the market is constantly shifting, whether it be interest rates, market conditions, supply, or a combination of factors. How do you approach risk management and long-term planning in an unpredictable environment?

van der Reis: Commercial real estate is a cyclical business with growth and expansion cycles and contraction/down cycles. You should always look ahead, anticipate, and be prepared for a down cycle. Arbor hired me in 2019 in anticipation of a down cycle because of my expertise in handling distress and turnaround situations.

I have been negotiating commercial real estate loan workout and restructuring for almost thirty years and have the experience and skills to help Arbor get through a down cycle. External factors cannot be controlled, but you can control your decisions about how to deal with them. Negotiating commercial real estate loan workout and restructuring is an art, not a science; it requires the right strategy to be successful.

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