The eponymous head of Spencer C. Young Investments, Inc. is a corporate finance executive and investment banker by trade, who has owned, managed and redeveloped commercial real estate since 1986. He possesses an extensive background in related capital markets, and is considered one of the pioneers of the Commercial Mortgage Backed Securities ("CMBS") market.
Founded CMBS Business
Spencer C. Young founded the Commercial Mortgage Backed Securities ("CMBS") business for JPMorgan in 1994, serving as Chief Operating Officer of its Commercial Mortgage Conduit, which provides attractive long-term financing through the origination of commercial mortgages for securitization. Within 18 months of his arrival, Mr. Young catapulted JPMorgan, a long-revered banking institution known for its business prudence and lending conservatism, from a non-market participant in the "Conduit CMBS" market to that of a market leader, achieving a # 2 ranking at the time he left his role.
He achieved such success by formulating exclusive strategic business alliances with major financial institutions throughout the U.S., who were market leaders in the regions they served. This created CMBS industry's most impressive group of strategic partners, who effectively "blanketed the nation" in its offerings of long term, fixed rate financing for commercial real estate. Working closely with the rating agencies, in-house Trading and third-party CMBS investors, Mr. Young also personally developed a rigorous and fully integrated underwriting and pricing methodology (coined the JPMorgan "Black Box") which enabled consistent and timely deal structuring for transactions throughout the United States. This Black Box was as secretive as it was effective, and eventually became the talk of the industry, such that Mr. Young was presented with a tongue-in-cheek award at the 1996 National Mortgage Bankers Conference to celebrate its omnipresent use and cloaked secrecy.
CMBS Market Leadership|In 1997, Mr. Young was hired by Morgan Stanley, who already had a strong franchise in all facets of commercial real estate, except in the area of commercial mortgage originations, which languished in comparison to that of JPMorgan. He was sought because of his track record of expedient success. In less than two years of his arrival at Morgan Stanley, Mr. Young's sweeping changes in their Conduit CMBS business operations and marketing resulted in a five-fold increase in annual business volume, increasing originations to $2.5 billion, while maintaining the high credit standards he had established at JPMorgan. What makes this fillip in business growth so noteworthy is that capital markets lending was essentially shut down for the last quarter of 1998 -- the result of market instability from the default of Russia's sovereign debt.
This growth was made possible because Mr. Young had lured ALL financial institutions with whom he had established CMBS strategic partnerships during his tenure at JPMorgan. This demonstration of client loyalty by major financial institutions spoke volumes about Mr. Young's business development skills, as well as the value he was able to bring to a Wall Street firm such as Morgan Stanley. By developing this important business segment from large financial institutions, Mr. Young solidified a market stronghold on agented securitizations, while also growing a competitive direct lending capability. In short order, the success of his approach became readily apparent.
In the three of the four years Spencer Young headed up its CMBS conduit business, Morgan Stanley was the # 1 ranked issuer in CMBS securitizations.
IQ® Brand Creation
Relying on his strong relationships with some of the largest and most well-respected financial institutions, Mr. Young conceived, developed and trademarked the most successful proprietary brand of CMBS, the IQ® brand, representing "Institutional Quality". This entailed the securitization of seasoned low leverage commercial mortgages originated by conservative financial institutions (principally life insurance companies) on heterogeneous loan documents, not intended for securitization - a novel idea at the time.
Due to the exceptionally high underlying credit quality, the inaugural transaction of this innovative product reopened the CMBS market in October 2001, after it was abruptly closed by the terrorist attacks on our nation a month earlier. And by the third such securitization transaction in 2002, the IQ® brand was valued at over $250 million.
All told, over the nine years Spencer Young served as an investment banker at the Wall Street firms that once were part of the "House of Morgan" (JPMorgan and Morgan Stanley), he was involved in over $7 billion in commercial mortgage loan originations, and over $25 billion in CMBS transactions, entailing the financing and securitization of commercial real estate properties (e.g., apartment buildings, shopping centers, industrial facilities, office buildings, hotels) in EVERY STATE of the mainland United States.
Importantly, the franchises he established and/or grew at these institutions are today worth $ Billions.
should NOT to be confused with the Mortgage Backed Securities ("MBS") for residential mortgages NOR sub-prime mortgages, which arguably played significant roles in procreating the worst economic crisis
since "The Great Depression
". Importantly, the CMBS market will continue to play an important role in providing liquidity to the commercial real estate market (e.g., loans for apartment buildings, retail shopping centers, industrial parks, office buildings, hotels).
Financial Executive at Citicorp
Prior to joining JPMorgan, Spencer Young served at Division Controller and Treasurer at Citicorp Real Estate, with offices in 26 cities across the United States, with annual loan financings of $10 billion.
During what was widely viewed as a period of economic depression in commercial real estate in the late 1980's/early 90's (the "Commercial Real Estate Depresssion
"), Mr. Young was responsible for arranging funding for a growing portfolio of non-performing loans, a challenging issue from a treasury perspective, because there was no telling how or when the loans would get worked out
He later joined a highly profitable start-up operation at Citicorp Securities, trading distressed commercial mortgages principally acquired from the Resolution Trust Corporation
Note: The RTC was established by Congress to ameliorate the impact of the Commercial Real Estate Depression. Specifically, it was a United States Government-owned asset management company charged with liquidating assets (primarily real estate-related assets, including mortgage loans) that had been assets of insolvent savings and loan associations (S&Ls, Thrifts, Savings Banks, etc.). The RTC is credited with having effectively launched the CMBS industry.