Finance N Illinois

BMO Harris’ Kim Liautaud: Looking back on a long career in CRE, looking forward to another strong year

Kim Liautaud profile,ph01
Kim Liautaud

Kim Liautaud has thrived in the commercial real estate business, and is now managing director and head of U.S. Commercial Real Estate at Chicago-based BMO Harris Bank. It’s been a long climb to this position, and Midwest Real Estate News recently spoke with Liautaud about how her long career in real estate and what she sees for the industry throughout 2018.

Here is some of what she had to say.

Midwest Real Estate News: You’ve obviously had a very successful career in commercial real estate. Can you remember what led you to this business?

Kim Liautaud: I’ll be honest: It was not a thoughtful, strategic pursuit of commercial real estate. I started my lending career as a C&I lender for a financial institution in Chicago. I enjoyed that and learned a lot about lending. One day, a manager came up to me and told me that there was an opportunity for a step up. This new position would be in the commercial real estate group. He told me that I was already technically ready. I remember him asking me if I would be willing to take the chance on learning a new business, a new job opportunity.

I always like to say that what led me to my field was an opportunity, but what kept me there was more strategic.

MREN: And what has kept you in this business?

Liautaud: I came to have a real love for the business. I gained an understanding of the demographics that drive real estate. I learned that there is a lot of science behind what drives the need for new real estate. And then there’s the fact that it is always fun to see a building start, reach completion and then work in the neighborhood it is built for. There are a lot of rewards there. I’d say, then, that it was that growing love for the business that has kept me in it.

MREN: Why has commercial real estate been such a good fit for you?

Liautaud: I am very inquisitive. Real estate is fascinating to me. I think it is my interest in demographics and local economies, and design. People think of real estate in terms of bricks and mortar and buildings, which it is. But it is also constantly evolving. Something that is very topical for me now is office space. Office space is evolving now. It is important to have an understanding of what is driving that, what that means for older buildings in the market. This kind of analysis is what I love, is what is so interesting to me. Often, people think of real estate as buildings. But it is a field that does evolve and change constantly.

MREN: Many of the people we interview about commercial real estate tell us that they love the fact that no two days are the same. Do you find that, too?

Liautaud: There is a lot of variety, to be sure. Taking on my new role at BMO Harris is one big change. For me, then, that feeling of having no two days be the same has multiplied this year. Every day there is a new task. Every day I am learning something new. In general, though, in this business no two deals are exactly alike. There are different challenges, unusual factors with each deal. Each day is never like the last.

MREN: What is most satisfying to you about this career?

Liautaud: I love to see deals through to completion. I enjoy seeing the physical asset completed. That never fails to excite me. That is a lot of fun. I enjoy, and take a lot of reward from, working with our clients. When I got into the business 25 years ago, the capital markets end of the business was a lot less sophisticated. I don’t mean that negatively. But the source of debt for real estate was a lot more limited than it is today. Equity tended to be less Wall Street equity and more mom-and-pop equity. Flash forward to today, and the capital side of real estate appeals to the numbers side of me. It’s why I got into lending to begin with. I do happen to view my clients as capital advisors. Helping them put the capital structure together for a transaction is very rewarding to me.

MREN: As you look to the rest of 2018, what do you expect from the commercial real estate market?

Liautaud: I do believe that equity is pushing pro forma underwriting a bit. I tell people that asking questions, being inquisitive and understanding transactions is paramount right now. The sales volume of assets was down, depending on who you ask, around 10 percent in 2017 when compared to 2016. Fewer assets traded hands. Most expect 2018 will be similar to 2017. There will be fewer deals trading hands. At the same time, there is a lot of equity on the sidelines that has been raised for the sector. When that happens people will push the economics to rationalize transactions.

MREN: The multifamily sector has been a hot one for a long time, and commercial finance providers have received plenty of requests for multifamily financing. Do you think this sector will slow at all in 2018?

Liautaud: There are different types of multifamily financing, construction loans and acquisition loans. I would tell you that for 2017, multifamily construction starts in general were down over the prior year. We closed less of those loans in 2017. I suspect that 2018 might actually see an uptick in construction loans for multifamily. Multifamily as a sector is always the safest bet in real estate. People pulled back last year because of the over-supply in some markets. People are now looking at 2018 starts as delivering in 2020, when the bulk of the new supply will have already delivered and worked its way through the market.

It’s always hard with real estate because it is a market-by-market business. What I just said was painting with a broad brush. We are a national lender. There are still some markets where that is not going to hold true. There are still some markets with just too much excess supply. It will take those markets a little longer to work through that. But I do expect that we will see more requests for multifamily construction loans this year than last year.

MREN: Do you expect any other commercial sectors to be especially strong this year when it comes to lending requests?

Liautaud: In the last two years, we have hired teams for healthcare lending, home building and hospitality. Those are three asset classes that we have hired people for to specifically grow our exposure to those sectors. We clearly think there are opportunities there. Of those three, we think the biggest area for opportunity is healthcare. And when we say healthcare, we mean all property types in healthcare: medical office, skilled and seniors.

Of the four main food groups, the most challenging now is retail, for all the obvious reasons. That doesn’t mean that we are not lending on retail assets. We prefer neighborhood, grocery-anchored retail. Big-box and regional malls are the most difficult.