The TreppWire Podcast: A Commercial Real Estate Show 307. Evolution of the B-Piece Buyer from the 90s to Today: Scott Douglass of Prime Finance
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Feb 11, 2025 Scott Douglass, Co-Founder and Co-Chief Investment Officer at Prime Finance, shares insights from his extensive background in commercial mortgage-backed securities. He discusses the evolution of B-piece buying from the '90s, emphasizing how the Great Financial Crisis reshaped market dynamics. Listeners learn about the significance of credit comprehension, the resilience of office spaces, and the potential of data centers. Scott also explores CMBS issuance trends and predictions for 2025, highlighting the need for strong platforms in navigating today's complexities.
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Career Beginnings
- Scott Douglass began his career at Nomura Securities, a CMBS pioneer in the 90s.
- He gained experience originating and securitizing large volumes of commercial real estate loans.
B-Piece Buyer Role
- The B-piece buyer in CMBS acts as the lender of trust, traditionally buying bonds below BBB-.
- B-piece buying has been episodically attractive, influenced by leverage and market conditions.
Early CMBS Challenges
- Early CMBS deals lacked sufficient data and long-term real estate cycle considerations.
- These deals often included specialized assets, leading to significant losses and binary outcomes.