The Distressed Property Market: Opportunities Ahead With Brian Good, Real Finds Podcast #46 Transcript
Brian Good: This year has been slower than everybody anticipated. The other lenders and colleagues I talk to daily are slow. The transactions just aren’t happening yet. There was a feeling there would be more distress in the market at this point in the cycle, and it hasn’t happened. I’m sure you’re hearing that from everybody. From our perspective, I think it’s still coming. There’s still a lot out there.
Gordon Lamphere: Hi, I’m Gordon Lamphere, and welcome to the Real Finds Podcast, the podcast that interviews key entrepreneurs, activists, and researchers shaping real estate and, as a result, our world. On today’s podcast, we speak with Brian Good. Brian is CEO of iBorrow, a commercial real estate lender covering a wide variety of asset classes. We discuss distressed assets, the evolving landscape of industrial, office, and retail, and how migration patterns and creative destruction are shaping a post-2020 world. If you’re interested in multifamily, retail, office, or industrial, it’s well worth a listen. Brian, thanks for hopping on the podcast.
Brian Good: Thanks for having me. I appreciate it.
Gordon Lamphere: Before we start, why real estate?
Brian Good: Why not? What’s wrong with it? It’s great. It’s always perfect, it’s so easy, you make a lot of money, and there’s never a problem.
Gordon Lamphere: Why not law? You started in law. Why pursue the real estate path?
Brian Good: It was evident to anybody I worked for as a lawyer that it was not a long-term profession for me. I was wired differently. I wasn’t built to sit at a desk doing research or reading documents all day. I was thrown into real estate when I started practicing in 1996. The market was in an upswing, the first firm I worked for was looking for young associates, and they happened to have an opening in the real estate department. I was better with numbers, and it was probably the least legal of the departments, with litigation being the worst match. Real estate was exciting: closings, deadlines, people to interact with, financial statements on properties they were buying. The firm represented a large office REIT in California called Arden Realty, and I had a relationship with the CEO and president before I became a lawyer, so our clients were good teachers. They’d tell me to put the documents away and just explain what they were working on, so I got a broader view. It was a time when publicly traded REITs were really starting to shine. The first transaction I worked on, the seller was Sam Zell, a legendary real estate guy. I got to sit down with him, and he was matter of fact: he thought everybody should be in real estate, and I think he was a reformed lawyer as well. As a junior, I was brought into the closings on complicated transactions with institutional buyers and sellers, finance partners, and joint venture partners, so I met a lot of interesting people I never would have met stuck in the library. I learned a lot in the two and a half years I practiced.
What a Good Deal Looks Like
Gordon Lamphere: I’m a reformed lawyer as well. People who start on the outskirts of the profession and move in often do so because they saw a lot of deals. What does an attractive deal look like?
Brian Good: I’ve been on a lot of sides of a transaction. I’ve bought, I’ve sold, I’ve been the lawyer, and for the last twelve years I’ve focused on lending. What’s attractive is when there’s a genuine intention among all parties to get something done. A buyer who likes the property but doesn’t have the means wastes a lot of time. I like working with experienced people who can cut to the crux of the matter when negotiating. You need two interested parties, and a buyer who’s comfortable with their price going in, not looking at a signed contract as a first offer they’ll renegotiate. When it’s legitimate on both sides, it’s exciting. What’s not mentioned enough is that there’s creativity in this business. People see things differently, make educated guesses, and are willing to put it all on the line. As I’ve gotten older, I really like seeing new structures: options to buy, different lending structures, loan structures I hadn’t seen before. I’m always open to learning those, and that keeps it exciting.
Gordon Lamphere: Can you tell me about a creative lending structure you’ve seen? We’re in a lower-liquidity market than we’ve been in the past.
Brian Good: A lot of what I’ve done is incorporate my experience into how we transact. At iBorrow, we can do transactions a lot of people can’t, and that has to do with the experience my partners and I have owning properties, being on Wall Street, and seeing how corporate deals are looked at. We’re traditionally a non-recourse lender, so we don’t look for personal guarantees to enhance credit and lend more. If someone offers a full repayment guarantee, we’ll take it, but it doesn’t go toward our underwriting. But take a value-add play where a buyer is buying an empty building, which has a lot of risk, but they have a good credit tenant in tow with a signed lease, whether industrial or retail. The seller may not know that, and once the tenant moves in, the buyer makes a lot of money by adding value. We’ll review those leases, and typically even a credit tenant has outs and contingencies: if the property isn’t delivered by a certain date, the tenant can walk. So in those cases, we make it non-recourse but with a limited guarantee from the borrower until the tenant occupies the space and pays rent, and then we waive the recourse provision. CMBS won’t do that, banks won’t, life companies have struggled with it, but bridge lenders have the flexibility and creativity, and it’s won us multiple transactions. Another thing is release provisions in our loan documents. For buyers of portfolios who want to sell and pare back, a CMBS or life company lender won’t give up collateral without being paid off in full. We’re okay underwriting each asset specifically, so if they sell one, two, or three, they can pay us down enough that we stay in the deal comfortable with the coverage.
Where to Find Distress
Gordon Lamphere: Creativity is great, but ultimately it comes down to the asset. What are you seeing in asset classes as we move into 2025, and where are the most successful deals focused?
Brian Good: It’s an interesting time. This year has been slower than everybody anticipated. The distress everyone expected at this point in the cycle hasn’t happened yet, but I think it’s still coming. If you’re a buyer looking for distress, your best bet is talking to other private lenders and seeing what they’re having problems with and trying to work out a transaction. Regional and larger banks with portfolio problems will sell in bulk to institutions, and that’s two percent of the buyers out there. The other ninety-eight percent don’t have that access. So go to private lenders and see what they want to get rid of. Another good method is to figure out how they’re financed. A lot of private lenders are financed with lines of credit and repo lines that are frozen, and if they’re frozen, they’ll have to shed assets and sell notes at a discount. That’s a better pathway than going to Bank of America to ask if they have notes to sell, which is a dead end. There are a lot of private lenders out there, they’re all visible, and they’ve all made bad loans they want to get rid of.
Gordon Lamphere: We have a story in our own portfolio where we tried to reach out to a large bank on a toxic asset and they didn’t want anything to do with us. We ended up buying it on the open market because it was a great asset. But we’ve worked with private lenders on that process and they’ve been phenomenal. Institutional size and scale can be an absolute hindrance to getting a deal done at all.
Brian Good: Every so often I give advice. My wife says once in a while it’s good.
Asset Classes: Retail, Office, Industrial, Multifamily, Cold Storage
Gordon Lamphere: What asset classes are seen as positive from the lender side?
Brian Good: Retail is a little stronger right now. I don’t know whether it’s independently a better asset class than ten years ago, since not everyone believes the internet will take over all retail, but paired next to office, it looks amazing, because office is so beaten up. Within office, older downtown central business district buildings aren’t going to get leased. Suburban office will have problems. The newer, amenitized ones will survive. Industrial on the fringe has had some softness, but overall it’s handling everything well and is still very strong. The one that could go either way is multifamily. Values are down. We’re in thirty-two states, so we see a lot of data, and for the most part it’s a thirty to forty percent value decrease over the last couple of years. If you’re okay buying with some negative leverage, taking on lease-up risk, and your money is patient, over five to ten years you’ll be rewarded. The whole rage toward data centers, I don’t get. They’re so expensive to build and take so much capital that I don’t see it becoming mainstream. The outdoor storage market, this new asset class, is a lot of smaller transactions, and I think it’ll always be a subclass of industrial. I love cold storage. It has so many attractive qualities. There are barriers to entry.
Gordon Lamphere: What are those qualities? In our market, cold storage is hotly in demand, but not a lot is getting built.
Brian Good: That’s the barrier to entry. It’s hard and expensive to build, but tenants are clamoring for it, and the demand is pent up. A few people have cracked the code and dominate the field. A company went public a few months ago with a bunch of cold storage and blew everybody away. If you can figure out a more efficient way to build, in areas that make sense, you have a chance at a viable model. Try to build cold storage in Santa Monica; it’s not going to happen. Outside Denver or outside Chicago, you have a better chance. Hedging everybody’s bets, certain divisions of industrial do really well and will continue to. Multifamily is the risk-reward play. And beyond property type, you have to focus more and more on geography. California is a very difficult place to buy and operate, and there are a handful of cities and states like that around the country that are detrimental to entrepreneurial real estate. Even within Texas, Austin is difficult to build in. I spend a lot of time there, and people complain about permitting, which is tough inside a state viewed as pro-business, pro-entrepreneur, and pro-landlord. Once you’ve figured out the property type, do the research on which city and area to go into.
Gordon Lamphere: How do you determine that?
Brian Good: It’s more than looking on the internet. This business is still, at its core, relationship driven. When we’re lending, the ultimate outcome is to get repaid, so we spend a lot of time with brokers and local counsel in these cities, talking about projects and what the impediments were. You have to spend time on the ground and figure out the trends. Nashville has always been considered an easy place to build and develop. Austin used to be, and now it’s trending the other way. Las Vegas was always a wonderful place to build with tons of land, and now they’re clamping down because of water issues and city-versus-county issues. Visiting, talking to people, then looking at demographics: who’s moving there, are companies moving there or running, how are the school districts. Those all factor into where you create your portfolio.
Multifamily Softness
Gordon Lamphere: You mentioned softening in multifamily. Where is it, and is it market or asset driven?
Brian Good: It’s supply and demand. Certain Sun Belt cities just overbuilt. Everybody saw the same demographics, said, my God, so many people are moving there, we need to build, and it became herd mentality. There’s too much product. Phoenix specifically, where we spend a lot of time, has too much, and over time demand will catch up with supply. Denver, Austin, other parts of Texas, a lot of Florida, Charlotte and the Carolinas: overbuilt. They’re great places to live and move to with great tax benefits, but for now, it’s soft. You’re seeing concessions, one or two months free rent, and landlords incentivizing brokers to bring people in, residential and commercial. From a contrarian perspective, that’s not a bad time. If you can get a big enough discount on the purchase price, it’s okay to start buying.
The Enclosed Mall Puzzle
Gordon Lamphere: Few things over the last twenty years have been as distressed as malls. Is there opportunity in mall retail, or are we throwing money down a hole?
Brian Good: You mean the enclosed, older-looking behemoths. When I was on the buy side doing shopping centers and retail, we never did enclosed malls, but I heard a statistic that there are about twelve hundred regional malls in the country, the bigger, department-store-anchored ones, and within five to ten years, eight hundred would need to be knocked down and changed in use, with four hundred surviving. At iBorrow, we’ve been approached to refinance or provide acquisition financing on a lot of regional malls, and everybody comes in with a plan. Macy’s or Sears is vacating, we’ll turn it into self-storage or multifamily. The problem is you need a lot of approval from the city, which can take years. If you convert to multifamily, everybody needs housing, so do we want affordable? What’s the composition? What do we do with the rest of the empty space? Do you want to live in an apartment next to a self-storage facility or retail being knocked down? It’s putting together a whole new puzzle for the property. As a short-term bridge lender, two to three years, do I want to be part of a three-to-five-to-ten-year transformational change of use? This is adaptive reuse that sometimes needs city referendums, a full environmental impact report with comments, more utilities. I don’t think the lending community is set up for that. Longer-term financing for adaptive reuse isn’t really out there. CMBS and life companies want a use in place. Construction lenders need a means to an end so they know they’ll get out in a specific time. If you buy an enclosed mall with some cash flow, you don’t know which direction it’s going, and that’s hard to finance. So you’re left putting a capital stack together for an amorphous plan, which means an institutional partner with big pockets, state investment type groups, and without a certain plan and prior experience, that capital is very hard to attract. So a lot of regional malls will stay where they are for the near future. People can buy them cheap and get cash flow by leasing to five jewelers and four shoe retailers with a Macy’s still paying rent. But it’s a puzzle that takes a lot of time, and I’m not sure the capital partners are there.
Financing Office and Conversions
Gordon Lamphere: Let’s talk about another asset class where capital partners are trying to make things work: office. It’s been distressed since 2020, and everyone’s talking about conversions, demolitions, or improving buildings to save them. What are you seeing on the financing side?
Brian Good: Not a lot of people are jumping in from a finance perspective. You really have to be prepared to be an all-cash buyer. If you have a solid, cash-flowing office building with mostly credit tenants and staggered expirations, and you’re underwriting it properly, meaning TIs, tenant improvements, and leasing commissions are treated as recurring everyday expenses above the NOI line rather than below-the-line items, there are lenders on newer, amenitized product who’ll lend fifty to sixty percent loan to value at somewhat tolerable rates. You’re buying at seven and a half to nine and a half cap rates, so there’s positive leverage, and those deals will pan out. There are also office distress buyers willing to provide preferred equity, last dollar in, riskiest money, at fifteen to twenty percent, because they’ll take the risk of owning the property and they like their basis. It’s truly a basis play. Something was four or five hundred dollars a foot, now it’s fifty to a hundred, and people get interested. The question is how to finance it and how to make money. And what people need to appreciate is that you can’t really mothball an office building. Turning it back on costs a lot of money, because the infrastructure is meant to be consistently on. So if it’s vacant, you’re still paying expenses while trying to attract tenants. But I do hear a lot of people dipping their toes in, looking at the basis and the quality of the building.
Gordon Lamphere: We’ve had success with distressed office, but it’s all about buying at an extremely low price, and I’m not sure there’s enough humility in the office market yet for yields to pencil on average. From the lender side, how would a conversion pencil?
Brian Good: This is interesting, because when I started in 1996, office was in vogue and office REITs got premiums. Now it’s the opposite. Office-to-residential conversions got a lot of publicity, and not a lot were actually happening, fewer than a hundred nationwide at one point. You have to realize a few things. If you’re converting, make sure it’s going to be vacant. Make sure it’s zoned or will be zoned for conversion. Then look at the nature of the building: you need bigger floor plates, older buildings. I’m not a developer; give me a hammer and I don’t know which end to use. But if each floor has two bathrooms and now you need thirty, there’s an infrastructure issue that costs a lot of money. Then, once you’ve converted, what does the building look like? A lot of conversions I’ve seen are weird-looking buildings: weird corners, weird lighting, a Jenga puzzle, with dark lobbies. You’re satisfying a need for multifamily, but if you’re spending all this money and time, you’d better have a building that leases up and stays attractive over the long term. Something built from scratch is going to look a lot better, and that’s your competition. It’s a valid effort, there’s a need for housing, and office to housing makes sense, but from an efficiency and idiosyncratic standpoint, it’s hard to see it becoming a prolonged business.
Migration, Insurance, and the Suburbs
Gordon Lamphere: The biggest picture everyone’s talking about is migration patterns, especially since 2020. As a lender, how does that influence how you look at a deal?
Brian Good: It’s become paramount, the number one or two issue in everything we do. To look at California and see the state not growing the last couple of years, with people net leaving, as someone born and raised third-generation Los Angeles, that’s scary, and it’s going to affect everything in the state. People are moving to the Sun Belt, away from cold areas and California, to places that are more business friendly, with better public schools and safer places to live. The other issue is insurance costs. We’re looking at another major hurricane running through Florida in the next day or two while they’re still recovering from one less than two weeks ago. That doesn’t signal a fluke; it seems like a pattern, and insurance costs aren’t going to normalize soon. So you make a judgment. We like lending in Florida, but do we like it with these insurance costs? Will that impede business? You can get insurance in Arizona and Texas; can you get it in California, Florida, New York? From an underwriting perspective, we’re always trying to get ahead of the curve on where people are going to move and do business, because it helps us plan where to lend. Over five to ten years, I’d much rather lend in a state with positive migration than one falling by the wayside.
Gordon Lamphere: Beyond state-level patterns, let’s look inside metro areas. One thing I find fascinating in my own practice is the move to the suburbs. We’ve seen a lot of flight from Cook County, and I’ve had tremendous success moving folks to the collar counties in Illinois and Wisconsin. Are you seeing that in other metros, or am I in a Chicago bubble?
Brian Good: Chicago, by the way, is one of the best leasing markets in the country now, which was news to me. Look at LA, where I’m from. Over the last twenty-five years there was a big push to move people downtown: condos, Staples Center, subways, hotels. And the only thing performing well in downtown Los Angeles is hotels. The condo market’s a mess, crime is up, office is a disaster. It worked, and then it didn’t. Downtown Chicago has all sorts of issues. Midtown New York, all sorts of issues. But the suburbs do fine. Northbrook, Glencoe, Highland Park are booming. In LA, Highland Park, Silver Lake, Echo Park, Venice are doing fine. San Francisco, terrible downtown, but the suburbs aren’t bad. So how do you reverse that, and do you want to? Philadelphia did a whole overlay zone five or six years ago, and the big thing was police. You have to have a safe place to live if you want people downtown, and the places I mentioned aren’t safe to live, walk, or eat. In LA we have Walt Disney Concert Hall right there. I’ll go Sunday during the day to hear the Philharmonic, but a nighttime show downtown? I don’t think so. Do I want to take the train to Staples at seven on a Friday? I don’t know. It’ll take city and private partnerships to make it work, and as a citizen and an entrepreneur, safety is first and foremost. If downtown doesn’t work, you expand into the suburbs, and that’s where everybody transacts. I’ve been to Chicago a lot, and there are a couple of great hotels downtown, but I like staying with friends in the suburbs by the lake, or in Lincoln Park. Downtown at night isn’t my idea of fun.
How Lenders View Deals Post-2008
Gordon Lamphere: That’s nothing you wouldn’t hear from your average Chicagoan. Some safety is physical, and some is financial. Post-2008, how do lenders generally view deals now?
Brian Good: Lenders want their portfolio mostly industrial and multifamily. If you can show seventy to seventy-five percent of your book there, that’s the safe play, and you get a lot fewer questions. We’re one of them. Our role is to get consistent risk-adjusted returns for our investors, and the industrial and multifamily blend typically gets you there. If you want risk on the fringes, you go into hotels and retail, with retail probably safer, and you stay away from ground-up and land. If you’re an institutional private equity fund looking for fifteen to twenty percent, you have to add ground-up risk, inexperienced borrower risk, or product type risk, so instead of 75-25 you’re 50-50, and you get twelve to fifteen percent instead of eight to ten. But understand going in that you’ll have more defaults and spend more time dealing with portfolio issues, which takes away from the ultimate goal of getting money out as quickly as possible. That’s what we’ve learned over twelve or thirteen years of lending.
The Final Four
Gordon Lamphere: That’s not too different from what we see on the development and brokerage side. Let’s go to the Final Four. First, one we ask every time: where do you see real estate and lending going ten years out?
Brian Good: AI is going to take a huge leap into our businesses. No doubt. Hopefully it makes us more efficient, with some speed bumps. If you’re a growing company not investing in AI, you’ll be behind the eight ball. I think for people graduating college who want that hundred to hundred-and-fifty-thousand-dollar job preparing offering books, when ninety percent can be done through an AI program, that’s a problem. There will be fewer young people in real estate, which is a shame. Hopefully those with a passion get in on the entrepreneurial side and do projects on their own. I’m hopeful lending gets away from being a stoic old ship, and that somebody comes up with more nuanced, equally effective ways to lend. People smarter than you and I will figure out the office market and make a lot of money on how offices get redone and how people work differently. Hybrid work is here from now on, which I think is a shame, because our best days at the office are when everybody’s here collaborating. We come up with better ideas and get rid of bad ideas quicker. And we’ll have a generation recovering from COVID, young kids like my own still dealing with the aftershocks of being locked up for three years, and I don’t think that’s noticed enough. There’s a younger generation that doesn’t know how to engage with other people, and my career has been all about relationships. If I couldn’t go out and meet people and talk with clarity and intelligence, I’d never have had this business. I’m answering all four of your questions at once, but I still love this business. There’s so much more to come, and it’s a very good way to spend your day and make money.
Gordon Lamphere: At least twenty percent of our audience is under thirty-five, with a large segment of young analysts and brokers, some under twenty-five. If you gave them one quick bit of advice, what would it be?
Brian Good: Never turn down a meeting. Go to every meeting you can, and read everything you can get your hands on. The more you read and learn from other people, the better off you’ll be, and the better communicator you’ll be. You’ll write better and talk to people better. Get engaged, get involved, meet people in person. Don’t rely on Zoom or emails. Do the work and you’ll be rewarded.
Gordon Lamphere: What should they read? Is there a book?
Brian Good: Anything Sam Zell wrote; he wrote several books, and they’re great. Michael Lewis is a great writer, and I love everything he’s written. From a magazine perspective, the general stuff like the Wall Street Journal, but read the other sections, the pop culture and general interest stuff. You learn about trends that way. The least helpful articles in the Journal for a real estate person are the real estate articles, because they’re not at a high level; they’re dumbed down. But GlobeSt and Bisnow have really good articles to dive into. Then find an asset class you’re interested in and dig deep. People who specialize in one asset class do a lot better than generalists.
Gordon Lamphere: Niching down is phenomenal advice. The whole goal of this podcast is to talk to brilliant minds in the arena.
Brian Good: How did I get on this, then?
Gordon Lamphere: The folks in the arena know the best people to reach out to. Who should we reach out to next?
Brian Good: If I said names, people would call me and say they didn’t want to do that. But I’ve had some great mentors. When I was getting out of practicing law, there was a guy named Kent Muton, who was a partner at a big law firm and just retired. I worked for him, we’ve maintained a friendship, and we recently went to lunch. He’s a brilliant mind with a good way about him. What he did for me, which I’ll never forget: my second day working for him as a second-year lawyer, he came into my office with a big box of documents and said, congratulations, you’re now a teacher at UCLA Extension. I said, what are you talking about? He said, I’m retiring from teaching, you’re teaching two classes, building a real estate portfolio, and loan originations and workouts. Two topics I knew nothing about. Here’s the material, learn it, teach it. There’s no better way to learn what you’re doing than to teach it. I taught at UCLA for about ten years to people much older than me who’d been through two or three recessions, and it was a great way to learn. And a guy named Richard Simon paved the way for what I do. When I was graduating college, my dad said, go talk to Richard. This was 1992, and Richard said, I’m selling everything, don’t get into real estate, go to law school. So I went to law school, got out, and my dad said, go talk to Richard. And Richard said, I’m buying everything now, practice law, I need the lawyers. He showed me there are cycles. He’s been a dear friend for years, one of those guys where you call and say you need twenty minutes, he says come on over, and you talk for two and a half hours. I hope I can pay that back to young people, in my company or not. I have two young daughters, and hopefully if they get in the business, people do the same for them that Richard and Kent did for me.
Gordon Lamphere: Those are two great folks. If someone wants to reach out to you, what’s the best way?
Brian Good: Email me at [email protected]. I’ve done a lot of mentorship at UCLA, and I get contacted by people from Northeastern, my undergrad UCSB, and Loyola Law School all the time. I’ll get back to you and I’m happy to chat.
Gordon Lamphere: Brian, thank you so much for hopping on the podcast, and we’ll have to have you on in the future.
Brian Good: It’s been great. Thank you so much for the invite. I really had a great time.
Gordon Lamphere: Thanks again to Brian. We appreciate his insights. If you enjoyed the podcast, please give us a like, a five-star rating, and a review. Your comments, interactions, and subscriptions truly matter and help us continue to provide quality guests. You can find us on YouTube, Spotify, or wherever you get your podcasts. I’m Gordon Lamphere with the Real Finds Podcast. Thank you for listening.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, manage, or invest in energy-adjacent, mixed-use, or transit-oriented property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q3 2026.