Ullico | Making Deals, Managing Risk
Ullico Bulletin

Making Deals, Managing Risk

Q&A with Matthew T. Downs, Senior Regional Manager | Ullico Real Estate Investment Group

The Real Estate Investment Group (REIG), a division of Union Labor Life, originates, underwrites and manages real estate mortgages. The 19 member professional team manages over $2.6 billion in commercial mortgages. We asked senior regional manager Matt Downs to tell us more about REIG’s activities.

You provide construction and permanent loans. What’s the difference?

Permanent loans are defined as loans which do not require construction. For example, a land loan or stabilized, cash-flowing property requires a fully-funded loan at the time of closing and not one which is funded over time. REIG recently provided a long-term client with a $58 million loan to acquire a Class-B office building in Midtown Manhattan. The loan proceeds were funded at closing and provided the client with the necessary cash to acquire the building in addition to the cash equity.

On the flipside, a construction loan is funded over time as a developer completes the project. For instance, if a developer is building a 300-unit condominium from the ground up, we might agree to loan up to 65-75% of the total project cost after the developer has infused its share of the total cost. Then, over time (typically on a monthly basis), we fund based on the work completed and verified through a construction monitor. I am confident when saying REIG (including the loan originators and loan servicers) are considered industry experts in this area.

What are some factors that affect your underwriting?

Market conditions are clearly the main driver for our business. That said, REIG also focuses on the strength of the sponsorship, long-term borrower track records in the various markets and portfolio diversification. We also look at opportunities with new developers that have sound financial positions, market intelligence with stable assets under management, and cash flow to cover economic downside. Regarding a new client, it is possible REIG would provide a lower loan amount and require a larger equity position until a working relationship with us is established. Real estate lending is not always about considering the particular asset or loan size but more about understanding the person that stands behind the property.

What can you tell us about the group’s risk management practices?

We mitigate risk by meeting face to face with the client and hashing out any business issues upfront. REIG takes pride in the due diligence process so that once approval is received we can move straight to closing.

What else makes Ullico different?

We’re not just your plain vanilla lending group. REIG has a tremendous ability to work closely with our borrowers to assist them in effective construction management from cradle-to-grave. REIG is a one-stop-shop and understands the ins and outs of each asset within the portfolio.

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