Distressed Debt Monitor: Q&A With SitusAMC’s Tim Mazzetti, CMB
Tim Mazzetti, CMB, leads SitusAMC’s Servicing & Asset Management division. He has more than 30 years of broad-based experience in the commercial real estate industry, serving previously as President and Head of Cohen Financial’s Investor Services Group from 2006 through 2018, where he was responsible for overseeing its $30 billion-plus CRE servicing and special servicing portfolio. Prior to that, he spent 12 years as Executive Vice President with Midland Loan Services. He also played professional football for seven seasons as a placekicker with the NFL’s Atlanta Falcons and in the USFL.
MBA NEWSLINK: You recently joined SitusAMC to lead the team’s efforts. Can you describe your vision for the firm in terms of commercial and multifamily finance?
TIM MAZZETTI, CMB: Yes, it’s been almost a year now since I’ve joined SitusAMC to lead the firm’s Servicing & Asset Management offering, and I cannot be more excited about where we are as an organization and the opportunities we have in front of us.
A big part of what attracted me to the firm was our unique “Life of Loan” capabilities. Because of our scope and scale, we’re able to support our clients across the entire lifecycle of their real estate investment activity. We operate as a true ‘one-stop shop’ for our clients, finding and capturing opportunities others simply cannot through the investment lifecycle. As an example, all under one roof, we can help underwrite and close loans, then proactively service and asset management them, value the underlying real estate assets on an ongoing basis, mark-to-market the loans themselves, and in this environment, perform activities to resolve distressed situations through the re-underwriting and special servicing of the assets.
When it came to our Servicing & Asset Management platform specifically, there was already a strong foundation that had been built. It enabled the team and I to focus on expanding our offering and going deeper with existing clients, providing high touch, customized solutions rather than just getting the basics right.
There is also an exciting vision here at SitusAMC that is shared across all areas of the business. That vision is to transform the industry through the development of technology and the innovate use of data to streamline decision making and surface issues in real time. We’re already seeing a lot of this on the residential side of our business and we’re working on some exciting opportunities that will have a positive impact for our commercial real estate clients.
NEWSLINK: The past several months have seen a massive shift for commercial real estate and business generally. How is SitusAMC positioning its business and what is one way the shift impacted your operations?
MAZZETTI: A massive shift almost feels like an understatement. This is unlike anything we have ever seen in the world and in this industry. My feeling is that when we come out on the other side, the industry, in terms of which companies make it and how companies run their businesses, will look very, very different.
As it pertains to SitusAMC, we feel fortunate to be in our current position. With more than 3,000 employees at SitusAMC, the sheer scale of our business affords us unique opportunities to adapt to meet our clients evolving needs throughout market cycles.
For example, we’ve been able to pull significant additional in-house resources from our advisory and valuation business lines to help our servicing clients with their proactive asset performance analysis. On the special servicing side, to stay ahead, we have redeployed very seasoned workout professionals from across SitusAMC to staff up for the increase in defaulted loans. In addition, given our strong corporate reputation, we have been able to hire 11 additional senior workout asset managers and we have several more in the wings. This broad depth leaves us well positioned to support our clients.
NEWSLINK: How do loan workouts and special servicing fit in with SitusAMC’s business model?
MAZZETTI: We have always viewed primary and special servicing as two sides of the same coin; said another way, we do not view them a ‘separate’ business but very much integrated pieces of the broader puzzle. We are organized and operate the business in a very cohesive manner and have the ability to quickly pivot key resources (as has been the case over the past 60 days) from performing loan asset management to loan workouts. In addition, having loan workout professionals involved in the performing loan asset management side of the business, with their knowledge of how a loan can get ‘broken’ and how to ‘fix’ it, is invaluable in helping our clients mitigate risk. This allows our team to understand everything from lease reviews, to draw administration for additional capital funding on construction loans, to ensuring property performance metrics are analyzed and trends perceived.
NEWSLINK: What type of activity have you experienced in terms of relief requests, defaults or imminent defaults so far?
MAZZETTI: Typical requests for relief and/or forbearance are 90-day structures that, if they can be handled as a performing loan consent, would translate to minimal charges for the borrower and minimal changes to the actual loan terms. Typically, these changes might include use of reserves to make P&I payments and possibly deferring property performance covenants and triggers.
These short-term or ‘stop-gap’ measures have kept overall defaults lower, but in our view, may only be buying everyone some additional time in order for all of us to gain a better view as to what the future may look like and how particular properties may perform and or recover (or not). Overall, we have seen the industry be very focused on making sure it is doing what’s right for the markets in the long-term.
NEWSLINK: It is hard to tell how long term some of the problems that borrowers are experiencing will be at this early stage. How do you make decisions about loans or even staffing up when nobody can tell if there will be a V-shaped, U-shaped or W-shaped recovery as the U.S. economy reopens?
MAZZETTI: Good question; and one we are all wrestling with–as I like to say, my crystal ball is cracked and cloudy right now. Until we all get some additional clarity about how the world will look like in three or six or nine months, or what the “new normal” might be, it is a challenge to determine the best long-term workout strategy.
Going back to my previous response, most of the forbearance agreements are shorter-term in nature, to buy us some time. Despite that fact, we really focus on whether the borrower is interested in retaining the asset longer term or if they are looking for a free option via a long-term forbearance with no consideration given. Over the years, we have always seen that borrowers who are willing to support the assets when distress occurs end up being the better partners for long-term modifications and recapitalization plans.
NEWSLINK: What has the process been like managing a team remotely and any thoughts to share about how the working from home experiment fit or clashed with your firm’s existing culture?
MAZZETTI: Like many other firms, the ‘work-from-home’ experience was dramatically accelerated by the impacts of COVID-19. Thankfully, facilitating a large work-from-home workforce has been something supported by the residential businesses at SitusAMC for years. That institutional knowledge, and the tireless efforts of our IT and HR teams, made it a surprisingly seamless transition for us at SitusAMC. As a result, we’ve had little disruption or impact on productivity.
In terms of culture, to be honest, little has changed. Sure, how we collaborate is now different in terms of video conferences vs. phone calls, but our culture has always been about delivering exceptional client outcomes and frankly, that hasn’t changed during this time. I know we’re all anxious to see our colleagues again and spend some quality face-to-face time with our clients, but we are highly confident in our ability to provide superior outcomes for clients whether it is out of an office or with staff working-from-home.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)
