David Brickman has been an instrumental part of Freddie Mac’s multifamily division for more than a decade, and now he’ll ascend to the top.
Brickman, who came to Freddie Mac in 1999, will replace Mike May as head of multifamily in July. In many ways, his fingerprints are all over the division: As vice president of multifamily capital markets, Brickman was a key architect in the development of the Capital Markets Execution program.
Before joining Freddie, Brickman co-led the Mortgage Finance and Credit Analysis group at PricewaterhouseCoopers, was a consultant to the Audit Commission of England and Wales on issues relating to public housing, and was the executive director of a community development corporation in Brooklyn, N.Y.
Apartment Finance Today senior editor Jerry Ascierto recently sat down with Brickman to discuss the task at hand.
AFT: What’s your first order of business?
BRICKMAN: My first order of business is to not mess it up. We’ve been on a tremendous roll. Mike has put us on a fantastic trajectory in terms of growing the business and transforming our culture and platform. And now it’s up to me to continue that process. We’ve obviously got our challenges, but we’re doing very well. We have a great credit profile; we’re making money. Really, I just want to keep firing on all cylinders.
AFT: What is your greatest challenge?
BRICKMAN: The biggest, by far, is our current status in conservatorship and the uncertainty that it creates both inside and outside. That’s got to weigh on people’s minds, both in terms of the Freddie Mac staff who are wondering what comes next, and some of our customers who are wondering will Freddie Mac—and for that matter Fannie Mae—be around in the future? These are hard questions, and it’s hard to manage through them.
But that’s where my humble attempt will be, to lead as best as I can through this [and] to provide as much clarity as I can as to where we are going.
AFT: You’ve got restrictions that Mike May didn’t have when he came aboard—namely, you can’t introduce any new products. Yet the permanent debt marketplace is growing more competitive. How do you rectify those two forces?
BRICKMAN: One way is to stick to what we do well and do it even better, be responsive to our customers, be prudent in our credit and underwriting decisions, be thoughtful and innovative in our executions. On the innovation front, that constraint is real. We can’t introduce new products, but we can be innovative and evolve in terms of how we do our business. We can enhance the products that we’ve got, improve our processes, improve our executions, and that will keep us in the thick of an increasingly competitive market.
AFT: I hear the CMBS industry is heating up, quoting spreads of 200 bps over the 10-year swap on some deals. Are you seeing more competition from the conduits?
BRICKMAN: It’s not foremost in my mind in terms of competitive challenges. There are other portfolio lenders who are more competitive than the CMBS market. While they are capable of winning deals here and there, we really haven’t seen them make significant inroads into our share. In our model, we do have a sort of built-in hedge. In the event that their bond spreads come in to make them more competitive, my bond spreads have probably tightened by a comparable amount, and I will have gone down by a similar amount in terms of what we’re quoting. So I benefit from the same positive momentum that’s benefiting the CMBS world.
AFT: What about portfolio lenders? What do you consider your competitive advantage over life insurance companies?
BRICKMAN: They certainly have been winning their share of business. For a very low leverage deal in a top-tier market, it will be a food fight and we’ll do everything we can to compete. But where there’s more of a story to the deal, where there is more structure required, where the asset is not in a top-tier market or is not a Class A property, we think we can understand that credit better. And yes indeed, all else being equal, we will tend to get to a higher leverage level than they would, but with an emphasis on still maintaining a prudent level. And our cost of capital for certain parts of the risk structure will be lower, given that we’re not holding it all on portfolio. So I think it will split out a little bit. For the lowest-leverage, highest-quality properties, it will be very competitive. But as we move away from that, that’s where we’ll tend to have the advantage.