Scott Roth and Patti Unti, principals at Ventras Capital Advisors, answer SCI's questions

Q: How and when did Ventras Capital Advisors become involved in the structured credit market?
A: All the Ventras principals and co-founders are former executives with Capmark Investments (see SCI issue 156). We lead the investment team, having previously served as co-heads of the securities team for Capmark.

We have both been involved in the CMBS market since 1997, with experience in all aspects of the CMBS investment process, including deal sourcing, bond analysis, credit due diligence, asset management, financing and disposition. The team has experience utilising both long and short strategies while investing in the entire CMBS capital structure.

Greg McManus, who previously served as Capmark's cfo and was responsible for the successful restructuring of the firm's affordable housing equity group, heads asset management and special servicing for Ventras. He brings over 21 years of experience in commercial real estate to his role, with an extensive background in capital markets, asset management and resolution of distressed assets.

Jimmy Parsley brings to Ventras more than 15 years of capital markets sales and trading experience, including extensive practice in the trading of various mortgage-backed securities and the structuring and implementation of hedging strategies. He was formerly the co-head of sales and trading at Capmark Securities Inc and a member of the firm's Board of Directors.

Q: What, in your opinion, has been the most significant development in the credit market in recent years?
A: The systematic re-pricing of risk. Over the past 24 months, countless investors have moved to the sidelines to 'wait out' the current market cycle. This mass exodus has caused the markets to seize up, as either cash is unavailable for transactions or investors simply don't understand how to underwrite the risk.

But with dislocation comes opportunity. So, while the majority of investors remain on the sidelines, risk underwriters like Ventras can step in, reprice the risk and put capital to work for its investor base.

Q: How has this development affected your business? What is your strategy going forward?
A: The market dislocation has created a real need for a risk underwriter like Ventras to step in, reprice the risk and put capital to work. The investment team believes it has the appropriate experience for investing in the market when it is out of balance and providing investors with excellent returns. We see a clear market imbalance in commercial real estate securities right now and believe we are well positioned to underwrite the risk on behalf of our investment partners.

We have also recognised a need in the market for commercial real estate workout experts. More than a decade of asset appreciation has masked property level issues, resulting in the need to restructure the underlying debt or, in more distressed cases, a liquidation of the collateral. We are in the process of building a platform of commercial real estate workout/asset management experts, many of whom earned their stripes in the late 80s and early 90s.

By bringing an established fund investment advisor and an experienced servicing/workout platform under one parent company, Ventras is in a unique position to mitigate risk for investors and still provide greater access to superior investment opportunities.

Q: What are your key areas of focus today?
A: Ventras is currently raising funds to invest in commercial mortgage-backed securitisations. Over the next two to three years, we expect there to be intense interest in opportunistically investing in distressed residential and commercial assets. We believe we are uniquely positioned to do well in this market, while helping to provide much-needed disposition solutions to banks and borrowers at the same time.

Q: What major developments do you need/expect from the market in the future?
A: We expect the commercial real estate debt markets to continue to decline as mortgage defaults increase with the wave of loan maturities beginning in 2010. This decline may present opportunities to raise distressed debt funds and perhaps equity funds as assets are liquidated post-foreclosure. We also believe this will be an excellent opportunity for us to partner with banks to assist them with their special servicing/workout needs.