In this new series, we ask industry leaders in the commercial real estate market how they entered the business and what they have learned along the way.
Gary Bechtel, CEO and managing principal of Red Oak Capital Holdings, oversees the firm’s national CRE lending platform and leads business development initiatives. Over his 40-year career, Bechtel has originated, underwritten, structured, placed and closed more than $10B in CRE debt transactions. A recognized industry thought leader, he is a frequent speaker and moderator at national real estate finance conferences and a regular contributor to regional and national industry publications. He will moderate a session at The Crittenden Report Finance Conference in May.
How did you get your start in CRE finance?
Prior to entering the field, I was in the marine industry and was heavily involved in competitive yacht racing. Several of the people I sailed for were successful in commercial and residential real estate. I wanted in.
One of them was Jim Warmington, then CEO of Warmington Homes, who took an interest in me and was kind enough to introduce me to people willing to hire someone with no experience. I spoke with professionals across residential and CRE, including leasing, sales, development and finance, before gravitating toward CRE finance.
That led to an analyst position with a regional mortgage banking company, where I learned the fundamentals of the business. After a year, I was promoted to loan officer. The journey had begun.
What is the best advice you have received in your career?
There are no shortcuts. Learn your craft, treat people fairly and be ethical in everything you do. We deal with large amounts of money and must take that responsibility seriously.
What types of deals are you focused on right now?
We focus on bridge loans from $2M to $20M secured by core asset classes — office, retail, multifamily, industrial, manufactured housing, self storage, mixed-use and hospitality — in primary, secondary and select tertiary markets. We also provide HUD financing on a standalone basis or in conjunction with a bridge loan. Many borrowers find the latter compelling because of our ability to provide stretch-senior structures.
What trends are you seeing in the market today?
We continue to see the non-bank alternative lending space — where Red Oak participates — playing a larger role in the overall financing landscape. Twenty years ago, this segment provided a fraction of the capital it does today, and I expect it to continue expanding as additional loan programs and executions are utilized.
What are you watching most closely in the year ahead?
I continue to watch the default rates and loan maturities, especially on out-of-favor asset classes. I’m also focused on underwriting standards as more players enter the market, though the recent run-up in yields appears to have cooled activity. If rates fall and the market becomes frothy, that’s when I grow concerned about weakening credit standards.
On the positive side, I’m interested in how new technologies will impact the business. I’ve seen a lot over the past 40 years and can’t wait to see what the future brings.
