On Thursday, May 2nd, the Cornell Baker Program in Real Estate welcomed Mark Fogel, Founder, President, and Chief Executive Officer of ACRES Capital, as part of its Distinguished Speaker Series. Mr. Fogel has more than twenty years of experience in commercial real estate finance, with a focus on providing debt and equity solutions for transitional, middle market assets. Prior to forming ACRES Capital, Mr. Fogel was an executive at several prominent commercial real estate finance companies where he oversaw loan production, asset management, and special servicing for a diverse portfolio of investments. Additionally, Mr. Fogel served as a senior officer at a $3.5 billion publicly traded mortgage real estate investment trust and subsequently assisted in raising capital and launching a successful specialty finance company during the Great Recession.
Mr. Fogel founded ACRES Capital in 2012 and has grown it to over $850 million in assets under management with 29 real estate professionals in three offices across the country. ACRES Capital is a New York-based private investment firm that provides debt capital solutions for the commercial real estate industry nationwide. The firm focuses on first mortgage liens for slight transitional or more transitional properties with an average balance of around $17 million, at sixty to seventy percent loan to value ratios, and for traditional terms of twelve to thirty-six months. While ACRES Capital lends on land deals, Mr. Fogel explained that land must be high quality and have all entitlements.
Given the current state of the real estate cycle, Mr. Fogel acknowledged that “debt is hot now.” Whereas most deals would previously have come to ACRES Capital in search of financing, now there is too much debt capital chasing too few deals. As a result, it is getting harder for the firm to source appropriate deals. ACRES Capital has met this challenge by digging a little deeper – it typically loans on only about three to five percent of the deals that it sees – though it has been careful to maintain its lending guidelines as Mr. Fogel is particularly proud of the fact that the company has never realized a single loss on any of its loans. One strategy that the firm employs to maintain the quality of its loans is to never make loans on properties that it is not prepared to own.
Private lenders like ACRES Capital once had a negative reputation, Mr. Fogel acknowledged, but he is seeking to change that reputation. He has found that borrowers really appreciate the flexibility that ACRES Capital offers and are willing to pay a slight premium for a “stretch loan” from the firm rather than undergo the hassle of setting up various tranches of debt with big, impersonal lenders.
While Mr. Fogel explained that fifty percent of the company’s loans are focused on sites in the Northeast and Mid-Atlantic regions of the country, the company would like to expand its footprint in Texas. In addition, ACRES Capital is also forming a servicing and special servicing platform so that it is well positioned with respect to the pools of distressed loans and assets that will result from the next economic downturn. Finally, while over fifty percent of the firm’s portfolio is comprised of loans on multifamily assets, Mr. Fogel explained that the firm seeks first to lend to quality sponsors over specific property types.
The Cornell real estate community enjoyed Mr. Fogel’s presentation and would like to thank him for sharing his time and insights as part of its Distinguished Speaker Series. It was a pleasure to have Mr. Fogel on campus again, and we wish him and ACRES Capital continued success.
