Location, return profile and quality of sponsorship. Those are the three characteristics that can make or break every real estate financing deal, according to Jay Soave, First Vice President, capital markets division at Matthews Real Estate Investment Services—and he would know. Soave is the former co-founder of Cadence Capital Partners, and he has more than two decades of experience structuring capital transactions with a total value of $15 billion.
"The sponsor and realistic underwriting expectations are the most important thing. Sponsors should be reasonable and pragmatic," Soave tells GlobeSt.com. "People can fall in love with their deal, and sometimes you need to listen to what the market is saying."
To ensure borrowers meet this criteria, Matthews Real Estate Investment Services' capital market's division rigorously vets every deal before taking it to the market. In order to make sure their analysis was methodical, Soave and his team sought for a solution and applied for the University of Michigan Ross School of Business' Multidisciplinary Action Project. With the help of six dedicated MBA students and feedback from over 250 capital relationships, they created a 23-factor scoring methodology to analyze each deal.
"It helps us make sure that the underwriting is sound and supportable," says Soave, who recognizes he has two clients – both the formal clients themselves and the capital investors who underwrite and fund the deals. "That is one of the things that we spend a lot of time on. Before we do a deal, we vet it. We are not bringing our capital providers deals that aren't going to work. We spend a lot of time picking the right deals."
Earlier this year, Matthews Real Estate Investment Services acquired Soave's and his partner Michael Bennett's company Cadence Capital Partners to support expansion into new geographic regions. "We found a great synergy from a team and organizational perspective with Matthews," says Soave. "Kyle Matthews, Chairman & CEO of Matthews™, is running a ship where people compete, but they compete in a friendly manner and everyone is rowing in the same direction. It is really a great atmosphere. We thought that reflected our atmosphere [at Cadence], and so it made so much sense when we came together."
Through the acquisition, Soave and his team now have a foothold in 13 offices, including surging secondary markets like Austin, Nashville, Dallas, Phoenix and Atlanta, where there is strong and growing investor demand. "This is really a growth story," says Soave. "Over the last five to 10 years, there has been a migration to the South. Some of that was accelerated by the pandemic, but it was happening anyway. Investors see that they can get better returns than in a major metro with the same or better risk profile." Those deals are sure to pass the Matthews' score sheet.
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Kelsi Maree Borland
