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Amid unsettled financial markets, First Security Commercial Mortgage reorganizes to remain nimble, competitive.
It's almost as if David Jackson, now president and CEO of First Security Commercial Mortgage, entered a time machine in 1988 that offered him a glimpse into the future. While working as a CPA for the Chicago auditing firm of Altschuler, Melvoin and Glasser, Jackson authored an article on trends in securitized debt that, in retrospect, proved to be remarkably accurate.
The piece, titled "Beyond the cycle: The role of securitization," drew parallels between the fledgling concept of securitization of commercial real estate and the earlier evolution of residential mortgage debt.
The article concluded that securitization - then a relatively obscure term that would ultimately revolutionize the commercial real estate industry in the 1990s - offered lenders liquidity in their portfolios. Jackson predicted that this new method of matching borrowers with lenders would gain momentum in the years ahead.
Jackson's dream was to link his commercial real estate interests with securitization, but he realized in the 1980s that certain market conditions would have to unfold before that would become possible. So, he waited.
Indeed, his conclusion was visionary because it came at the height of the real estate cycle -- before the savings and loan debacle and the subsequent rescue efforts of the Resolution Trust Corp. in the late 1980s and early 1990s paved the way for the conduits as we know them today.
"Conceptualizing multi-class securities for residential alone was something new," Jackson recalls. "To take it a step further, and then draw a parallel to a future commercial mortgage world, was just in the range of a small amount of people."
Fast-forward
Ten years later, Jackson is living his dream. His Chicagobased company is a nationwide conduit lender for a multitude of property types: office, industrial, retail, hospitality, multifamily, senior living, self-storage and manufacturedhome community properties.
From its inception in 1994 to the midpoint of this year, First Security has grown exponentially, in terms of loan origination, product types served and number of employees (see timeline). For example, in 1995 the firm originated $125 million in loans. The next year, the figure rose to $250 million. By the end of 1997, the figure had risen to $400 million.
But...