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On this episode, we sit down with Warren de Haan, the co-CEO of ACORE Capital — one of the biggest nonbank lenders in the country, having originated $7B in commercial real estate debt last year.

He speaks about launching a $1B fund targeting distressed hotels — and struggling to find many deals to deploy it in. De Haan also said the Russia-Ukraine War is going to have knock-on effects that will play out in the real estate market, as will record inflation that is being experienced in the U.S. right now — namely on the ability of middle-class Americans to spend on travel.

He discussed where he sees opportunities this year, and where he sees potential pitfalls, especially in life sciences, with tenants that come with higher risks and developers potentially out of their depth. He talked about the kinds of assets that may be at risk of foreclosure and shared his views on which kinds of office properties he is interested in lending on — and those he wants to avoid.

“We have a real problem with the generic, B-quality office building with low ceiling heights, poor window lines, poor ventilation, poor elevator banks and small lobbies. We’ve seen rents in a lot of those buildings go from $75 per SF, to $50 per SF, and the lease terms get shorter and shorter,” he said. “We haven’t seen strong demand coming into those markets, we’ve seen increased vacancy and we’ve seen rents drop. So from a lender's perspective, I don’t see much upside.”