Our Businesses

Development & Ownership of Class-A Mixed-Use and Multifamily Assets

The Mack family has been investing in commercial real estate for more than half a century and has a history of identifying and capitalizing on short- and long-term real estate investment opportunities globally throughout multiple market cycles. MREG’s investment approach is highly research-driven, with a well informed view of cyclical and secular market developments, and emphasizes local expertise and execution capabilities.

MREG’s structure and capital relationships position the firm to take advantage of changes in the investment landscape. Although nimble enough to capitalize on these changes, MREG values long-term, stable growth and isn’t pressured to sacrifice it in favor of momentary short-term performance gains. Therefore, the firm is selective and doesn’t seek to invest in every opportunity or sector.

Initially, MREG’s equity investment business has been focused on building and redeveloping institutional-quality multifamily assets in high barrier-to-entry, gateway urban markets that have experienced dramatic shifts in demand in recent times. These markets include New York City, Los Angeles, Seattle, Portland and Miami, where MREG and its affiliates have more than 5,000 units in various stages of development and operation.

Commercial Real Estate Lending
& Debt Investments

MREG has observed that real estate debt has historically generated strong risk-adjusted returns with relatively modest volatility, particularly in market downturns. In 2014, MREG established its alternative lending platform – Mack Real Estate Credit Strategies, L.P. (MRECS) – in light of elevated U.S. commercial real estate (CRE) prices, making equity investments more challenging to structure and underwrite to meet the needs of some investors; the needs of property owners to refinance upon the maturity of their existing debt, providing for steady demand; reductions in the issuance of commercial mortgage-backed securities (CMBS); and a sharp decline in higher-risk CRE financings by banks, each representing a contraction in available finance sources.

MRECS leverages the firm’s broader infrastructure and expertise to help its investors capitalize on this contraction and pursue attractive risk-adjusted returns. For borrowers, MRECS seeks to fulfill many of their financing needs which banks used to satisfy but no longer can in a more regulated environment following the Global Financial Crisis.

MRECS’ credit analysis routinely draws upon MREG’s perspective as a ground-up developer, owner and operator, seeking to create competitive strength through highly calibrated risk assessment, structuring, downside scenario planning and hands-on execution capabilities.

MRECS’ current investment strategies:

MRECS has originated, co-originated and acquired more than $14.0 billion of commercial real estate loans since the launch of its first strategy in 2014. Although MRECS may pursue other credit investment strategies on an ad-hoc or programmatic basis, MRECS has recently been focused on the following strategies:

Higher Yielding Credit:

A flexible strategy that facilitates an opportunistic approach to credit investing. Investments that may be considered include the origination of mezzanine loans, stretch-senior loans, construction loans, distressed-debt acquisitions, preferred equity and public securities including CMBS. MRECS typically controls the origination process and syndicates a portion of each risk, frequently at closing, as deemed appropriate or desirable. This strategy also reviews tactical situations that may emerge from time to time, such as from market dislocations, bank deleveraging or new regulation.

In all of its current investment strategies, MRECS seeks to:

Senior Transitional CRE Lending:

Origination of large balance, income-producing, primarily floating rate whole loans collateralized by transitional commercial real estate assets across major U.S. markets at relatively conservative LTVs, including first mortgages and/or loans of similar credit quality. Borrowers are typically well known, seasoned commercial real estate sponsors. Underlying properties require some level of renovation, re-leasing, other repositioning or construction to optimize value. This strategy emphasizes current cash yields with primarily match-term, limited recourse financing.

In all of its current investment strategies, MRECS seeks to:

Draw upon the broader MREG platform to inform underwriting and navigate issues along the way

Provide speed and certainty to borrowers via “one-stop-shop” execution

Thoroughly analyze viable downside cases if a borrower fails to execute its business plan

Obtain exposure to “execution risk” (the risk that a borrower will fail to execute its business plan) while limiting “basis risk” (the risk of a reduction in property value so significant that a loan becomes seriously impaired regardless of execution capabilities)

Institutional-Quality Property Management

MREG’s commonly controlled property management affiliate, Winthrop Management L.P., provides property management for commercial, industrial and residential properties in major markets across the United States.

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In late 2018, Winthrop Management bifurcated its residential and commercial portfolios with an emphasis on growing the multifamily business. Winthrop’s residential portfolio currently includes approximately 4,000 units in high-rise, mid-rise, and garden style buildings in major U.S. markets, including New York, Los Angeles, Seattle, and Miami.

Winthrop maintains full-service operations in-house, including marketing, on-site staffing, technology implementation and support, accounting and reporting. This approach promotes consistency across Winthrop’s communities while delivering a high level of customer service. Winthrop is headquartered in Boston and employs more than 100 people.

To learn more about Winthrop Management, click here.