The Main topics on Michael May’s mind these days are legacy and growth.
When May left Freddie Mac’s multifamily division in 2011, the government-sponsored enterprise (GSE) was still a critical lending platform, in the midst of a banner year. But May also knew, given all of its regulatory scrutiny, that the organization wasn’t exactly on a growth path either.
“We had an important liquidity role to provide,” May says, “but we weren’t necessarily free to evolve the business, because new products were frozen during conservatorship.”
With the housing finance reform debate looming on Capitol Hill, May knew the agencies’ footprints would soon tread more lightly. So, he took a year off, spending the first half traveling with his wife, and the other six months slowly making his way back into the business.
He consulted for a time, and even mulled jumping into the single-family rental segment, which seemed to offer outsized opportunities. But after exploring the possibilities and crunching some numbers, May soon concluded that the shadow market had little long-term viability.
So, he began looking for a firm poised to seize the opportunity created by the GSEs’ pullback, a company committed to growing into the best business in the CMBS space. New York–based Cantor Fitzgerald fit the bill.
A year after leaving Freddie, May became managing director of Cantor’s newest affiliate, Cantor Commercial Real Estate. After spending a few years with a conservator breathing down his neck—and able to offer only a limited menu of loan programs—the freedom of running a CMBS platform in the private sector was a breath of fresh air.
“It’s freeing, because you have a customer with a unique need,” he says. “You can come up with just about any product that will suit that need.”
The formation of Cantor Commercial Real Estate helped the company securitize $3.1 billion in loans in 2012, nearly double the amount it did in 2011. The company’s early return to the CMBS space, just as the segment was starting up again, helped Cantor become the fifth-largest CMBS lender in the nation last year.
“We could see the conduit market redeveloping, and we were one of the first ones in, leveraging old relationships we had with borrowers and brokers,” May says.
But it wasn’t just the revival of old networks: May also introduced Cantor to a bevy of borrowers that, in the past, only used agency debt. And given his deep knowledge of how the GSEs operate, Cantor was better able to understand where the GSEs were competing—and where they weren’t.
Before May joined Cantor, there was about a 120-basis-point (bp) difference between conduit and agency loan pricing. By the end of the year, that figure had fallen 20 bps, putting CMBS loans within striking distance of agency pricing.
But there’s still a ways to go in expanding Cantor Commercial and helping it truly take over the CMBS space, which is just what May signed up for.
“I wanted to build something with a group of good people and [build] a legacy that lasts long beyond me,” he says.