This is the Good Neighbor Podcast, the place where local businesses and neighbors come together. Here's your host, Mike Murphy.
Speaker 2:Thank you, charlie, I appreciate you and welcome back once again to the Good Neighbor Podcast Union. Our intent is to bring local business owners and influencers into your life, to just kind of introduce you to them, let you know them as human beings, the people that they are, as opposed to just a logo on a billboard, a business card or on a website. Today, my guest is Michael. How do you pronounce your last name, mike, jennifer, jennifer, michael, jennifer? And the reason I'm asking that is you know, michael and I have never met before. We live in close proximity, I've heard of him, but I've never met him before. So today is that opportunity for us to meet, and you guys are flies on the wall as I learn more about Michael's business, blue Mark Capital. So, michael, why don't you tell us about Blue Mark Capital? What do you do?
Speaker 1:So, in its very simplest sense, I finance command and business. I do a commercial real estate on a long-term basis, generally speaking 10 years plus in duration, generally speaking, a million dollars plus in loan amount. And I do it uniquely, not through the traditional banking sense but through life insurance companies. Those life insurance companies collect premiums, those policies are a liability to the life insurance company and they match assets against those liabilities because, typically speaking, the policies don't pay out in the short term. A life insurance policy may never pay out. So they collect those premiums and they invest those dollars in long-term assets.
Speaker 1:Now they do that in one of two ways. They simply can go to the bond market and get a fixed return by buying, let's say, a Kroger bond at 6.5 percent. Or they go to the mortgage market Now because our lenders that we represent are throughout the country. Those lenders need a network of correspondence that have their best interest in mind, and so my company helps them create those mortgage investments. Like that bond, it has a fixed return for again, 10 plus years in duration.
Speaker 1:So my company, we find the loan opportunity, we structure that loan, we help close that loan and, most importantly, we help service that loan over its life. So a mortgage banking company like mine versus a mortgage brokerage company that you could equate to simply a residential mortgage loan. Those loans are packaged up and they're sold as an investment. They're rated and sold and pension fund by that paper and other investors. So I am very specific in what we do. We create those investments for those life insurance companies and because those companies are located throughout the country, they allow us really to facilitate that and to take care of that loan over the duration. So right now we we manage a portfolio of Approximately 1.9 billion dollars for about 25 different.
Speaker 2:Wow, okay, there's a lot there, but question number one for me is how does somebody get involved in that business? How did you get involved in it?
Speaker 1:So I started my career in banking as a construction lender. This is 30 plus years ago and you know, the banking politics and environment kind of wore me out, and at the time there was a small mortgage banking company here in Cincinnati called Vanguard financial and, as a construction lender, the bank that I worked for did and facilitate the ground up from dirt to a building and, generally speaking, banks want to be on the shorter end of the curve when they do their financing, so they want to stay with construction. They want to stay Five, six, seven years in duration. They don't typically go 10, 15, 20 years. So the mortgage banking field in which I serve now has always been that long-term source for an investor to place a permanent loan on that deal, and so I used to transact with Vanguard as a Construction lender. I would lay it off once the construction was done to Vanguard and then they would take it to the market so you learned that.
Speaker 1:You know, if I wanted to stay in banking I could have on a certain degree of success, but I was capped as to the amount of income I could make. And mortgage banking is is effectively an eat what you kill kind of industry Commission based and at the time I thought I could be more successful monetarily Doing that long-term loan. So I jumped out of the bank environment at that time as a vice president and jumped into a commission based industry, starved for a couple years and then started, started hitting it.
Speaker 2:So I've been doing this for about 30 years now. Well, good for you, that's a. That's a nice long run. Well, you know, you mentioned earlier you, you, you find a loan opportunity. So what does that look like? Who are you looking for? Who should be contacting you?
Speaker 1:So, traditionally speaking, I would say that our most active clients are our repeat borrowers. They invest in apartments or in retail centers and they create a portfolio. You know those are our key clients. However, we do transactional business, so anybody who owns brick and mortar on the commercial side it could be an owner occupied, a warehouse, it could be a retail center, apartment building, an office building those that own that type of real estate I have the mechanism to put a long-term fix rate long.
Speaker 2:So if somebody is just kind of starting out in their you know, real estate investment career and they've got dreams of maybe buying their first Multi-unit building apartment building, Can they call you and deal with you? Or or are they too raw for you? What's that feel like?
Speaker 1:You know the, the magic, the magic sauce is good borrower, good real estate. Those two components are imperative for the investors we represent. If that young borrower has a deal of scope that would have interest to any number of lenders, I represent the, the junior nature of that individual, that's. That's not as important as looking at their track record, looking at the metrics of the deal alone, value the cash flow coverage, those types of things.
Speaker 2:If the deal works, we very much want to be at the entry point for that investor who hopefully is going to grow that portfolio and do multiple deals with us so Be there to kind of help guide the newbie in terms of figuring out if it's a it's, if it's a good deal and if all the ratios are in line and if you want to be involved. Is that true?
Speaker 1:Oh, absolutely. In fact, to a certain level I I I'd like to mentor and if I'm doing my job right, I'm creating value and creating work so that young investor can lean on me and my expertise on the investment side and I can help guide that player who, frankly, is willing to take the risk and put their capital at risk, their equity at risk, to do a commercial deal that takes steel Cajonis for a young person to step out there and take those risks.
Speaker 2:So yeah, I do enjoy that part of the business. Nothing ventured, nothing gained, though I assume there you go. Okay, so you and I are both residents of Union and I know that there's plenty to do around town. There's a lot of activities happening in Northern Kentucky. Which ones do you partake in? What do you do for fun? You do have fun, don't you?
Speaker 1:Well, I'm gonna go off the trail here and say that as an empty master, my wife and I are 60 years. We've been empty masters for a dozen years or so. I'm the kind of guy that I've renovated my entire house from top to bottom, from basement to bedroom to bathrooms. Right now, my pantries tore up. We have the typical stock of wire shelving and I'm building custom cabinets and building shelving. So fun, I don't know. I'll call it fun because I enjoy doing it. It keeps my mind off of my business. My wife does quilting and we're doing the old fart stuff right now.
Speaker 2:Well, I'm right there with you. You know I'm 60, my wife is not too far behind me, we're empty nesters and now we're in this big old house and not knowing what to do with ourselves someday. So we turn our attentions to right now it's the backyard putting in a patio back there doing some landscaping. So I kind of understand where you're at Now. Getting back to your business, is there any misconception or myth about your business? Anything that you want to make sure people understand about the business?
Speaker 1:Yeah. So just to familiarize some of our neighbors with some local deals that we've done affinity of union apartments we did that deal. The outlaw of our new crow or the two retail buildings with Chipotle and Orange Theory going down 42 Walgreens on Mall Road, bunch of stuff on Mall Road, industrial buildings in the industrial park, the perception has always been that the permanent market will only do pretty deals.
Speaker 1:Now, those are good looking deals, but no man. If it's an ugly building and if it's good real estate with a good borrower, I can find capital for that deal. So the misconception is that getting into the permanent market with a life insurance loan has to have a certain quality to it. Now, quality is about good real estate characteristics and sometimes ugly buildings are good pieces of real estate and that's what we focus on.
Speaker 2:That's a good point. I'm sure, like around union, we all have driven around and we've seen those buildings that have lived a life in the past and they're just kind of sitting there for looking for someone to either breathe new life into them or at least take better advantage of the real estate under the building. So if there are people in town that kind of have a vision and want to talk to you, I've gone to your website and I know you've got a pretty good staff. But if I pick up the phone and call you, do I deal with you or do I deal with someone on your staff?
Speaker 1:For new loan opportunities. You know any of our producers my son's involved in the business, brent, call him, call myself. You could walk into our office. I will say right now, with what's happening in the interest rate markets, which are integral to our production, there's not a lot of stuff going on right now. Really, the Fed, with their activity and the discount rate trying to tamp out inflation, you know, interest rates have gone up dramatically 18 to 24 months. I was lending 10 to 20 years, fixed in the high twos to the mid threes, and now I'm lending in the mid sixes to seven, you know. So that kind of trajectory on interest rates has, if you will back the Fed in their opinion, has tamped down activity and that's really what the Fed's attempt is is to arrest inflation.
Speaker 1:So right now, man, it is a tough way to go. We've been through these cycles before. I'm 100% confident in the resilience of our economy, so we will bounce back. But there's an adjustment period that a lot of our clients have to recognize that it is what it is. Real estate is capital intensive. It eats money, you know, and it takes a lot of equity and a lot of debt to make a $5 million retail center fly. Those rates aren't going anywhere anytime soon in my opinion, and so right now we're in that adjustment period. People can call me, they can walk into my office, they, you know, we'll figure it out if there's a deal there.
Speaker 2:So, having been involved in the Northern Kentucky business community for most of the 30 years myself, I've made a lot of contacts. I do business with a lot of business owners in town. So if I've got one or two that have some commercial property to sell say they're looking to sell a building and they've not found a buyer yet, just because of the climate right now, are you able to kind of help broker a deal or, you know, connect one end to the other.
Speaker 1:We do. You know we have very active investors who are looking for growth and new deals. That's not necessarily, you know, I put people together and say, hey, you guys figured out. That's not my typical line of business. I provide the debt on that kind of transaction.
Speaker 2:Okay, but you can be a connector of people. But, like, as you said, hey, you know A meet B. Now you guys go at it, and if you need me to help provide a solution, I'm here for you.
Speaker 1:Yeah. So I would say a lot of our clients would probably look at BlueMark and go Mike, you manage $1.9 billion worth of stuff. There's gotta be some weak links in there. There's gotta be an owner that's having problems and wants to divest or sell his property. And that's a fair assessment, but not, frankly, that accurate, because even though a borrower may be having problems, if I do my job right up front, it's cash flowing and it's good real estate, so there shouldn't be any problems. But I have constantly clients saying Mike, if you have any deal that slips through the cracks and is having problems, we'll swoop in and buy.
Speaker 1:There is still a lot of money on the sidelines right now. There's a lot of capital looking to be deployed and so unfortunately we don't have any deals that are going sideways right now. Now, another couple of years we're part firm. We might have some deals hit the wall, but right now there's nothing that concerned me longer term. But to that point we try to facilitate and we're helping to borrow, we're helping to lender out of a bad situation and we're helping a prospective new buyer of that property as well. But yeah, we'll put those deals together if we can.
Speaker 2:Well, mike, thanks for educating me and the listeners. I knew nothing about your world until this morning and I have to say you are somebody who represents your business very well. Thank you for the descriptions that you've given us. I want those who are listening, who think that they might want to reach out to you, to give you a nice trail back to you. What's the best way to reach you?
Speaker 1:BlumarkCapitalcom. All my contact information is there. Blumarkcapital, that website will teach you a little bit more about what we do, or what would be more fun. Just walk into my office cold. Just walk in and say, Mike, I want to talk to you about a deal. I think that'd be more fun.
Speaker 2:Well, I know that they can look that address up online, but what is the address? Where is your office?
Speaker 1:700 Walnut downtown Cincinnati. So those familiar with the old Jeff Ruby's Steakhouse they were a tenant in this building on the first floor. Ruby's is still there, with an event center called La Fica. But we're in that building and, incidentally, we have it financed. It's performing well.
Speaker 2:Well, mike, thanks for your time today and I hope to meet you in person someday and shake your hand and maybe enjoy. You know, whether it's a soda pop or a glass of bourbon, whatever your pleasure is.
Speaker 1:I'd love to do the bourbon. Yeah, all right, with interest rates where they're at, we'll do the bourbon.
Speaker 2:You're speaking my language, brother, all right. Well, thanks for your time today, and so, with that being said, thanks for listening to the Good Neighbor podcast with us today, mike Ginevur with BlumarkCapital. Thanks for your time and to the listeners out there as always, be good to your neighbors. We'll see you next time. Thanks for listening to the Good Neighbor podcast union.
Speaker 1:To nominate your favorite local businesses to be featured on the show, go to GNPunioncom or call us at 859-651-8330.