The TreppWire Podcast: Episode 368

In the Eye of the Commercial Real Estate Storm with Michael Comparato, Benefit Street Partners
Date: December 16, 2025

Overview

This episode features a special guest, Michael Comparato, President of FBRT and Senior Managing Director & Head of Commercial Real Estate at Benefit Street Partners (BSP). Drawing on his extensive, multigenerational experience in real estate and finance, Michael breaks down the current state of the commercial real estate (CRE) market, how BSP strategically navigated the past few tumultuous years, industry-wide challenges, and the long-term outlook for different asset classes. The conversation is candid, deeply practical, and full of actionable insights for CRE professionals, investors, and market observers.

Guest Introduction & Background

[00:05 – 04:34]

• Michael Comparato’s CRE Roots:
  Michael shares how he was born into a real estate development family, starting with his great-grandfather and grandfather post-WWII, and growing up on job sites from age three.

  "I was really born into the industry... Commercial real estate's been in my DNA. It's been in my blood. Got a passion for it, some would say an unhealthy passion for it every once in a while, but love what I do and I've been around it literally my whole life." — Michael Comparato [01:27]

• Perspective from the Ground Up:
  Michael emphasizes his unique learning curve: landscaping at 13, drywall at 15, and a hands-on view of every part of CRE—ownership, development, capital raising, and tenant relations.

Benefit Street Partners: Philosophy & Platform

[04:34 – 11:03]

• Holistic: Not Just Lenders—Real Estate People:
  Michael explains BSP’s approach, underpinned by operational and development experience rather than just financial modeling.

  "We look at things through the lens of development because I grew up around it... I will take a good story over a great spreadsheet any day of the week." — Michael Comparato [04:34]

• One-Stop Shop Vision:
  Over the past decade, BSP has evolved into a firm that can provide construction loans, bridge, mezzanine, preferred/common equity, CMBS, and agency lending—culminating in a $12-$13 billion platform.

  • Acquired by Franklin Templeton, which Michael calls a "phenomenal partner."
  • Recent key acquisition: NewPoint ($425 million agency lender) to fill out the agency side.

• Emphasis on Culture:
  Michael highlights the importance of partnering with good people and building a culture of integrity and collaboration, stating,

  "I am a culture warrior... the people at NewPoint are just outstanding human beings... it's really a once in a career kind of opportunity for us." [09:17]

Market Dynamics & Strategic Positioning

[11:03 – 18:22]

• Limits of Spreadsheets:
  The conversation pivots to how fast-rising interest rates and unforeseen events can render historical modeling useless.

  "...your model is wrong, right? Like your model's wrong. I don't know how wrong... but it's wrong." — Michael Comparato [11:45]

• Conservative Stances:
  BSP made two big macro calls that buffered against recent turbulence:

  • Anti-Office Before It Was Trendy: Office exposure capped at 5%, now down to about 1%.
  • Conservative Underwriting: Stopped lending on 1970s–80s vintage multifamily in tertiary markets as valuations became irrational—focused on newer assets in liquid markets.

• Approach to Distress—Not ‘Extend and Pretend’:

  • BSP’s philosophy is to "acknowledge and address" rather than delay problems. Comfortable owning and turning around real estate if necessary.

  "We said maybe a year, 18 months ago. We're taking the exact opposite approach. We're taking the acknowledge and address approach. And we've been foreclosing assets and we've been taking them and we've been fixing them up and we've been liquidating them. Knock on wood. So far, everything that we've taken back and liquidated, we've either done it at break even or a slight gain." — Michael Comparato [15:14]

• The “Eye of the Storm”:

  • Michael likens the current market to the eye of a hurricane: it feels calm, but underlying problems—older office and multifamily in secondary/tertiary markets—haven't been fully addressed yet.
  • Warns the hardest part is likely still ahead (2026–2027) and true recovery requires cleansing these troubled assets.

  "I think we're in the eye of the storm, right? ...We haven't really truly addressed office and we haven't really truly addressed the 1978 Chattanooga, Tennessee deal." — Michael Comparato [16:43]

  • Stresses the destructive impact of negative leverage on the sector and the need to reestablish a positive leverage environment.

Asset Class Dissection: Office, Multifamily, and B/C Markets

[18:22 – 28:43]

• Office Market Realities:

  • “A tale of two markets”: Class A, amenitized office in prime markets is resilient, but there’s a "death spiral" for older, B/C office in secondary markets.
  • Calls out banks’ reluctance to take back distressed assets—leading to neglect and accelerated asset decline.

  "...if you have an office built, a 1982 vintage B office building in Chattanooga, Tennessee, what's that worth?... it's probably worth land value, less demolition costs if we're going to call a spade a spade. And I just don't think we've dealt with it right." — Michael Comparato [19:08]

• Multifamily FOMO and Value Add Myth:

  • Questioned the “value-add” proposition during the boom; many operators “rode the wave” of interest rates, not necessarily their own skill.

  "Every guy was walking in, in 2021 saying, I'm the smartest multifamily guy ever. It's like, no, you're not, okay. Interest rates went to zero. Cap rates went to three and a half. Like, of course you 3x your equity and it had nothing to do with you refacing some cabinets." — Michael Comparato [22:16]

  • Critique of short-term flip mentality; the true nature of CRE is long-term wealth creation through compounding rent/income.

• Cycles & Lessons:

  • New market entrants from post-2008 have never seen downturns—overconfidence led to “blow-off tops.”

  "If you 3x your equity in, in two to three years, that's an anomaly... That's not how this industry works." — Michael Comparato [26:34]

Where Are the Bright Spots? Opportunities & Cautions

[28:43 – 34:33]

• BSP’s "Meat and Potatoes" Approach:

  • Focus remains on multifamily, industrial, select shopping centers, occasional hotels—cautious on niche sectors.
  • Avoided life sciences, doesn't play in data centers; too much tech/binary risk, not “true” CRE.

  "I can't convert [a data center] into multi. I can't convert it into a hotel... it is either a data center or it is a just empty, useless pile of billions of dollars or something." — Michael Comparato [29:48]

  • Only considers deep fundamentals; leaves the high-tech “moonshots” to firms like Blackstone.

• Office—Opportunity for the Brave:

  • Michael predicts someone will make a fortune buying at the bottom, but only with patience and capitalization for a long, uncertain hold.

  "Show me an office building that I can buy for 40 or 50 bucks a foot. I think that you could make real money... If you're going to dip your toe into office, do it in the equity." — Michael Comparato [33:15]

Long-Term Outlook & Closing Insights

[35:21 – 39:05]

• Not a V-Shaped Recovery:

  • Michael emphasizes that while the CRE market will recover, it will require patience, discipline, and a return to long-term investment horizons.

• Investment Horizon > Capital Stack Position:

  "If your investment horizon is 7, 10, 15 years. And again, you're patient, you know, capital P, go buy a good asset. You can go buy a brand new class a multifamily asset in a great market. And I promise you, like in 10 years that will be worth much more than it's worth today." — Michael Comparato [36:37]

• Commercial Real Estate as Inflation Hedge:

  • Hard assets like real estate offer both an inflation hedge and a current return, which gold and other assets can’t provide.

• Back to Basics:

  • The “fix and flip” mindset may be gone for a while; Michael hopes for a reset to the industry’s historic norms of patient capital and long-term value creation.

  "I'm hoping... we get back to kind of the way the industry ran for a long, long time." — Michael Comparato [38:13]

Notable Quotes (with Timestamps)

• On underwriting & modeling:

  "I will take a good story over a great spreadsheet any day of the week." — Michael Comparato [04:34]

• On industry corrections:

  "We called the correction at the peak of the market... That's not right. Like that's not how this is supposed to work." — Michael Comparato [14:30]

• On negative leverage:

  "Negative leverage in any industry is a really bad thing. In commercial real estate, it's devastating because it's so heavily debt reliant." — Michael Comparato [17:47]

• On asset strategies:

  "...The downside risk of office between credit and equity. It looks very similar, right? ... If you're going to dip your toe into the office space, do it in the equity. Like give yourself a chance to 2x or 3x your money if you get it right." — Michael Comparato [33:15]

• On CRE as an inflation hedge:

  "...The great thing about real estate is it's an inflation hedge that has a current return. Owning a bar of gold, you can't chisel a little piece off and go to Publix and groceries. Commercial real estate, you get a return." — Michael Comparato [36:17]

Key Segment Timestamps

• Guest Introduction and CRE Upbringing: [00:05 – 04:34]
• Benefit Street Philosophy & Platform: [04:34 – 11:03]
• Industry Modeling Challenges & Market Calls: [11:03 – 16:43]
• Distress, Office & Multifamily Market Realities: [16:43 – 28:43]
• Sector Opportunities & Data Centers: [28:43 – 34:33]
• Outlook, Investment Horizon, and Final Thoughts: [34:33 – 38:44]

Final Thoughts

Michael Comparato’s advice across the episode is to embrace patience, know what you’re buying, don’t rely solely on spreadsheets, and stick to real estate fundamentals. The market is not “all clear” yet, and the true corrections—especially in office and older multifamily—have yet to fully play out. Owners and investors with real operating know-how, strong capitalization, and a multi-year horizon will find the best opportunities on the other side of the storm.

For more industry insights and to connect with Michael, reach out to him via LinkedIn.