Nov 9, 2023 · 47m · capital-allocators
Ted Martell – Empty Rooms: Commercial Real Estate Non-Performing Loans in NYC at Maverick Real Estate (EP.349)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Ted Martell, co-founder of Maverick Real Estate Partners, joins Ted Seides to explore the niche market of New York City commercial real estate non-performing loans. He explains how Maverick leverages proprietary data systems, rigorous credit underwriting, and aggressive two-prong loan workout strategies to generate institutional returns from distressed debt.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 17.6% of the talking time here. How this is scored →
Ted as informed peer 2.9 Guest teaching 2.7 Guest disagreement 0.1 Ted pushing back 0.3
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 21:18 Defending aggressive legal track against distressed borrowers
Martell pushes back against the host's characterization of their tactics as overly aggressive, emphasizing that commercial borrowers are sophisticated operators who understand the rules of leverage.
Hardest push from Ted ▶ 21:03 Host challenges dual-track workout aggressivenessSeides directly questions Martell on whether pursuing litigation remedies simultaneously while having restructuring talks feels too sharp-elbowed.
Biggest teaching moment ▶ 12:00 Manual mechanics lien extraction blueprintMartell details the tactical insight of extracting downtown NYC court records on green-screen terminals and outsourcing transcription to build their first data moat.
Ted holds their own ▶ 36:25 Host drills into macro debt maturity scheduleSeides frames the structural interest rate shock and macro liquidity constraints, prompting Martell to contextualize the historical drop in commercial lending.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Episode Overview: NYC Real Estate Non-Performing Loans | 0 | 0 | 0 | 0 | Solo host introductory monologue describing the episode premise, Maverick's fund overview, and lighthearted sports commentary. | |
| Formative Background: Discipline in Music, Sports, and Architecture | 2 | 1 | 0 | 0 | Seides asks standard biographical prompts as Martell recounts his upbringing with musician parents and balancing Princeton athletics with architecture. | |
| Early Career and Founding Maverick Real Estate Partners | 2 | 1 | 0 | 0 | Martell shares his path through construction, Columbia Business School, meeting partner David Aviram, and launching Maverick in the aftermath of 2008. | |
| The First NPL Deals and the Mechanics Lien Discovery | 3 | 3 | 0 | 0 | Martell explains their first profitable deal in Williamsburg and how discovering a mechanics lien led to manual green-screen scraping at the county clerk's office. | |
| Scaling Sourcing Systems and Transitioning to Discretionary Funds | 3 | 3 | 0 | 0 | Discussion centers on systematizing outbound outreach to distressed lenders, raising discretionary funds, and ingesting multi-jurisdiction public data sets. | |
| Underwriting Standards, Target Loan Profiles, and Due Diligence | 3 | 3 | 0 | 0 | Martell details their loan sweet spot ($2M-$20M middle market), underwriting criteria, DCF models, and probability-weighted cash flow modeling. | |
| Loan Acquisition Dynamics and Two-Prong Workout Strategy | 4 | 3 | 1 | 2 | Seides presses on whether simultaneously negotiating with distressed borrowers while pursuing aggressive legal remedies feels sharp-elbowed; Martell defends the pragmatic commercial framework. | |
| Exit Strategy, Foreclosure Realities, and Firm Architecture | 4 | 3 | 0 | 1 | Martell explains their preference for fast, high-IRR note resolutions over taking back properties, noting transfer tax friction and avoiding operational development risk. | |
| Partnership Dynamics, Decision Governance, and Compensation Alignment | 3 | 3 | 0 | 0 | Martell explains Maverick's 50/50 partnership governance, resolution of deadlocks, and unique compensation structure that eliminates bonuses in favor of high base salaries and fund carry. | |
| Proprietary Data Moats and LLM Technology Integration | 3 | 4 | 0 | 0 | Martell describes their ten-year internal data warehouse moat, building proprietary LLMs to ingest and parse legal loan covenants, and staying under large institutional fund radars. | |
| NYC Commercial Market Dynamics and Multifamily Focus | 4 | 4 | 0 | 0 | Seides and Martell examine post-COVID New York City real estate, complete avoidance of office assets, and the upcoming refinancing wave in middle-market multifamily debt. | |
| Market Friction, Balance Sheet Bottlenecks, and Growth Outlook | 4 | 4 | 0 | 0 | Discussion on the persistent bid-ask spread bottleneck on bank balance sheets, borrower denial, patient dry powder deployment, and long-term multi-billion scale potential. |
Statements from this episode (27)
Martell and David Aviram are 50-50 partners in Maverick Real Estate
“David Aviram, who's my fifty-fifty partner in Maverick. We've been business partners since 2010.”
Martell: Maverick's first NPL deal returned a 1.3x multiple in three months
“That first transaction paid off in the first three months. We made about a 1.3 multiple.”
Martell: Maverick bought a Lower East Side mechanics lien at 50% discount
“On the second transaction that we did, we bought a loan secured by a hotel under construction on the lower east side of Manhattan. There was a mechanics lien sandwiched in the middle of the capital stack. We ended up negotiating with the construction company t…”
Martell: Non-performing loan purchases require rapid capital and close in five days
“Buying non-performing loans requires you to have capital and the ability to move quickly. These transactions can close in as quickly as five days, but lenders want certainty of closure, and they want to know that you're going to do what you say you're going to…”
Martell: Maverick is investing a $317M sixth fund that is 80% institutional
“We're presently investing out of our Sixth private equity style fund, which has about three hundred seventeen million dollars in commitments, and 80% of that capital is institutional, limited partners, foundations, endowments, and pensions.”
Martell: Maverick profits from loan discounts, default interest, and fees
“We make money by buying those loans at a discount to the underlying collateral value, and then encouraging repayment from the borrowers. The profit is made up of any discount to the principal balance that we are able to negotiate with the lenders, as well as t…”
Martell: Maverick has executed 185 non-performing loan transactions
“Naturally, after doing 185 of these transactions, we've also built some relationships.”
Martell: Maverick is NYC's top non-performing real estate loan buyer
“Maverick has become the number one buyer of non-performing loans secured by real estate in New York City.”
Martell: Middle-market NPLs lack systematic capital competition due to complexity
“That middle market space, there's a tremendous amount of opportunity for us to play in it because it's complicated, because the material is complex, and because there's not a lot of other capital pursuing those opportunities, not in a systematic way the way we…”
Martell: Maverick's LP return mandate is high teens net
“So our mandate is to deliver high teens net returns to our LPs.”
Martell: Maverick is reviewing record pipeline volume but closing few deals
“What we've been experiencing in the market for the past 12 months, and really even further than that, going back to the beginning of interest rate hikes, is a bid-ass gap in the market, and so we've never been busy or underwriting or looking at opportunities, …”
Martell: Simultaneously negotiating and enforcing legal remedies resolves distressed loans fastest
“Deploying both of these things at the same time is the most successful means towards facilitating a fast resolution. In other words, you're talking to them, but you're also enforcing your legal remedies.”
Martell: Distressed borrowers often exploit relationship leniency from banks
“I think borrowers many times will abuse that relationship with their banks.”
Martell: Friction costs make loan settlements superior to taking property ownership
“If we end up owning the properties, there's really significant friction cost on the transaction due to transfer taxes at broker fees and carrying costs. And so we've found historically that you're better off settling with the borrower before it comes to that.”
Martell: Maverick takes back keys on 10% of NPL investments
“We are willing to take back the keys, and we've done so about 10% of the time that we've made investments in non-performing loans, and so we've taken back the keys about 20 buildings.”
Martell: Easing up on foreclosure litigation signals weakness to borrowers
“When we think about the stick and litigation, we don't stop. We don't let up. It would be perceived as a weakness. And it's important for us to push from that side hard.”
Martell: Maverick pays no bonuses, offering above-market salaries and carry
“A lot of firms in the real estate space have more of an eat what you kill structure, but we've decided we don't want to pay bonuses to employees at all. Instead, we pay them a high base salary, and their comp exceeds market comp, and they have the ability to i…”
Martell: Deadlock in 50-50 partnerships is a tremendous benefit
“Many people worry about 50, 50 partnerships when you have a deadlock. Well, if you have deadlock, you can't proceed. And so you need to figure out a way to solve that problem. And so in the early days, we would talk about it very calmly. You have to check your…”
Martell: Maverick has spent millions over a decade building proprietary data warehouse
“We've been building Maverick's data warehouse for over 10 years now. We've spent millions of dollars on it.”
Martell: Maverick uses custom LLMs to extract loan terms beyond human scale
“We are able to build a large language model that actually ingests the loan documents and pulls terms From those loan documents, inputs them into a spreadsheet. It's able to do that at a rate that is superior to what a human can do, and at a scale that no human…”
Martell: Maverick's $7M average deal size deters larger institutional competitors
“So our average transaction size is seven million dollars. That keeps a lot of the larger players out of our space. It's too complicated and too much work for them to get involved.”
Martell: Over $600B in active real estate debt exists in NYC
“There's over a million properties in New York City, over a thousand lenders, currently over six hundred billion of active debt secured by real estate in New York City.”
Martell: Maverick holds zero debt secured by NYC office properties
“We actually own no debt secured by office in New York City.”
Martell: Multifamily consistently comprises ~60% of Maverick's portfolio
“The vast majority is multifamily. It's about 60%, and that's pretty constant over the years since we've been doing the business”
Martell: Real estate lending activity has plummeted over 50% post-rate hikes
“If you graph out lending activity over the past 20 years, we've experienced an extremely precipitous drop since the start of the rate hikes, and we're over 50% below where we were before rates started getting hiked, and so the market's really frozen.”