One of the key risks in the current market is not having an equity mindset when underwriting new transactions in uncertain times.
“I’ve been a lender for most of my career,” said Carrie Hartle, Investment Manager, Real Estate Debt, Schroders Capital. “The industry can have a tendency to underwrite five-year cash flows without understanding the liquidity and the investor universe and being able to underwrite the exit risk,” she added. “You’re pretty likely to get it wrong.”
Hartle explained that Schroders has 200 real estate professionals across the UK and Europe who cover all segments of the market. “We rely heavily on their input so that we can try to get it right and really understand the exit and ultimately, get repaid.”
Boots-on-the-ground-professionals who are active in the market and are transparent because you’re on the same team is a lot easier than working in a vacuum of a pure lending role, she said.