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Charles Krawitz: Chief Capital Markets Officer | Head of Commerical Lending at Alliant Credit Union
54 Plays1 year ago
A 30+ year financing industry veteran, Mr. Krawitz’s career commenced in 1987 and includes leadership positions with highly regarded financial institutions including ABN AMRO, KeyBank and Fifth Third Bank.
In January of 2017, Mr. Krawitz joined Alliant Credit Union in charge of commercial lending. Subsequently, Mr. Krawitz was selected to additionally oversee Alliant’s loan trading operation, its FinTech partnership development activities, and its Select Employee Group relationship channels as Alliant’s Senior Vice President, Chief Capital Markets Officer and Head of Commercial Lending. Under his guidance, Alliant strategically purchases and sells residential, consumer and commercial loans, diversifies its balance sheet through the identification and cultivation of fintech relationships across divergent asset classes, and offers membership in Alliant Credit Union as a co-branded employee benefit with some of our nation’s largest employers.
Mr. Krawitz served on the board of a large CDC, where he was named Director of the Year in 2011. In 2020, Mr. Krawitz was inducted into the Midwest Commercial Real Estate Hall of Fame, and in in 2021 was selected as a Manager of the Year finalist by Gallup. In addition, Mr. Krawitz headed a team that won CUNA’s Excellence in Lending Award in 2018, was selected as a Lender Influencer by GlobeSt.com in 2020, Lender of the Year by the Illinois Real Estate Journal in 2023, and a Top Mortgage Lender in both 2021 and 2023 by Connect Media.
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Transcript
Reflecting on College Days and Early Ambitions
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Speaker
you
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dive right into this, Charles. So you are a fellow alum of U of I. And I know that you love it. Studied finance as an undergrad. What were you like in college to the best of your memory? Like, did you have sort of a really solid self-concept knowledge of what you wanted to do upon graduating? Just where were you at that point?
00:00:51
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Well, I was in college, I was extremely, extremely driven. I was hyper competitive academically and getting, you know, a good grade wasn't enough. Getting the best grade in a large classroom was a challenge that really excited me. And it was a little bit odd because I had not been here to for a very competitive person.
00:01:16
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I certainly have never been into sports, could have cared less really about sports. But when it came to the academic world, things lit up for me at Illinois. Yeah. So previous to college, you weren't all that focused on academics at all. This is something that I mean, I would say, I would say I was a solid student. Certainly Illinois was a competitive school and still is obviously.
Influence of Entrepreneurial Grandmother and Career Path Shift
00:01:41
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And I was a solid student, but probably part of it was that I wanted to, I wasn't a direct admitted to the business school and I had to keep my GPA up. And I was like hell bent on getting into the business school, which probably served me well, you know, that challenge.
00:02:02
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Was there somebody in your life who was really keeping that goal top of mind for you, like a parent or a faculty member, maybe somebody who'd been headhunting you, I guess, as an undergrad to get on that finance route? So that's interesting. My grandmother was a business entrepreneur.
00:02:21
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and provided me with significant guidance in my life. And I think I felt that getting into business would allow me to emulate my grandmother's success. What was her business of choice, if you don't mind me asking?
00:02:36
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She was in a lot of different businesses. But the thing that really took off for her was party supplies. So when you go out and you buy fancy paper plates for a party, or you want a nicer disposable table cloth. So party supplies. Oh, wow. Okay. She manufactured she manufactured and distributed nationally.
00:03:00
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Were you thinking to join her, I mean, as a sort of business partner or do you want it to find your own thing? Strangely I was. I thought I would take over her business one day. And during spring break, probably of my junior year, she asked my brother and I to meet her for lunch. But first she wanted us to go to her warehouse and we meet with her. And then she says on the way out,
00:03:23
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Oh, I want to introduce you to, you know, someone new. And she introduces us to this guy who's incredibly well dressed. No one else in this warehouse and in the office component, they're particularly well dressed, but this guy is incredibly well dressed. He seemed out of place. So we go to lunch with my grandmother and she says, you know, Charles,
00:03:42
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I know you always thought you were going to go into my business, but you know what? This was the business that I chose for myself. And that guy that I introduced you to, he's actually buying my business from me. So you're not going into my business because I've
Transition to Commercial Real Estate and Networking
00:03:57
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sold it. I want you to pursue a path that is of your choosing entirely, which was admirable of her.
00:04:04
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And your thinking at that point was to narrow in then on what? I mean, I would ask if it was banking immediately, but I know that you have a master's degree in urban planning. So I'm wondering like how it is that you got to the place that you are now. I had accepted a job with Exxon doing internal audit. And my older brother, one year older than me, also, you know, at University of Illinois says to me, you don't know anything about internal audit.
00:04:30
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And I said, well, it seems to pay well. And he goes, no, this is this is not for you. This is this is terrible. This is boring. You're never going to like it. Besides not in Chicago and your whole family is in Chicago and you're not going to leave Chicago. And I said, yeah, I think I think I am. I think I'm going to leave Chicago.
00:04:46
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And as we're going through that discussion, I get solicited by a real estate syndicator. There's three big real estate syndicators in the country. They all happen to be out of Chicago, J.M.V., V.M.S., and Bellcore.
00:05:01
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And jam be solicits me and they said we've identified you as someone who's you know at the top of your class that we would potentially like to join our management training program why don't you interview with us and i do interview with them they have offices at nine hundred north michigan avenue building had recently been built.
00:05:18
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And it is oozing with success. Successful people work here in this really decked out office. And unfortunately, I don't get the job offer from JMB, but soon thereafter, I was able to get a job offer from Bell Corps.
00:05:36
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and who was one of the other big syndicators. I didn't know that the tax law had just changed. I wasn't aware that accelerated depreciation was going to be no more, and that the whole platforms of these syndicators were basically tax shelters were going to go away. And so unfortunately, my job at Bell Corps did not last very long, but it
00:06:02
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encourage me to go into commercial real estate that's where i got sold on commercial real estate i was thinking a lot about the built environment and how that affects our psyche and shapes us as people and shapes us as a society and so i ended up getting a job with the company called rue block
00:06:21
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Rubloff was the premier office leasing company in Chicago. There was a lady at Rubloff named Goldie Wolf. Goldie was the top office leasing broker at the top firm. Goldie decided to leave Rubloff and start her own company. She asked me to join her. I didn't think she even knew who I was. I was literally
00:06:43
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you know, the entry level analyst comparing the cost of leasing space at building A versus building B versus building C. But Goldie asked me to join her and I was very excited. And that's how I got started in commercial real estate. And then eventually I went to grad school and came out and got into the financing side commercial real estate. How did you build that initial rapport with Goldie? I mean, like I am at JLL right now and we're just chocked
00:07:13
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full of analysts, right? Everybody's trying to make an impression. So what was it that you were bringing to the table that you think caught her eye? Well, maybe I got lucky. There were only two analysts. It was either Dan or myself. And I think one of her
00:07:29
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whatever right hand people probably knew me more so than gold he did and when this company the small company broke away and started they needed someone who could use a computer quite honestly this was at the advent of the pc of having a computer sitting on your desk.
00:07:46
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And I literally knew how to graph a very basic graph of bar chart showing occupancy costs that you know at a few buildings and that was. At the time it was like wow that's neat stuff we need to include this in every sales pitch that we do to show our competency and our expertise.
00:08:07
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OK, how did you end up transitioning into the world of transactions? Obviously, computer tech usage skills are extremely important on this side. But why leave from everything? It was really, really hard to escape the pigeonholing of he's just our analyst. You know, he's not someone who's got a vibrant and dynamic personality, certainly could never go into sales. He's the nerdy, you know, back office analyst.
00:08:36
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And it was very hard to escape that, for sure. And coming out of graduate school, I ended up getting a job at a small community bank. The small community bank got acquired by a large regional bank. Everyone kind of got laid off except for me, and I was there kind of holding the relationship bag. And
00:08:58
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I guess by default that I was able to pivot into a more relationship centric approach or opportunities and propel my career
Education and Industry Insights at LSE
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forward. What was that like? I mean, you go from being that backroom analyst to all of a sudden being a very frontward facing person with clients. Was the transition uncomfortable to you or did you relish the opportunity? I think I realized that to succeed, I had to step out of my comfort zone.
00:09:27
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that I had to reflect back on how Goldie conducted herself, the dynamic that she brought to the table, and that I tried to learn lessons from observing and thinking back on how she approached business in a very, very tenacious, direct way and starting to set challenges for myself.
00:09:49
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where I would go to different networking events, industry networking events, usually presentation followed by breakfast or presentation followed by cocktails, and I would set goals for myself. I would say I'm not leaving this event until I have talked to three people that I think are of substance and can help me at some point
00:10:12
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in the advancement of my career. And so I would set these goals and I would literally, you know, wouldn't leave the event until I had met those three, four, five people, whatever, whatever I established before I went into it and challenging, you know, kind of challenged myself. And at first it's awkward and uncomfortable, but then you get good at it. Or you realize, wow, I'm going to be the last one out the door because I haven't fulfilled my objective. Yeah. Yeah. What kind of business were you looking to attract at these meetings? What were you presenting on?
00:10:40
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You know generally speaking it was to secure relationships with property owners developers as a means of providing financing for their commercial real estate enterprises. OK.
00:10:55
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You mentioned grad school as like a passing thing, but if I remember correctly, you went to the London School of Economics or? Yes, yes. Were you in the UK? I mean, when you were there or? Yeah, so I was in the UK 1990, 1991, and I got a master's in regional urban planning. It was close.
00:11:16
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At the time, it was as close to a degree in real estate as I could find overseas. There were very few real estate programs in the U.S. at the time. I had applied to and gotten into Wisconsin's program, which had a great reputation. But the professor, Professor Grasskamp, who had founded this program, had just passed away. And it was unclear whether this program reputation was going to continue beyond Grasskamp or not.
00:11:44
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And so I was a little leery about going to Wisconsin. I had gone a semester abroad my junior year to the London School of Economics. Obviously London was a neat dynamic place and I thought going abroad to study regional urban planning to learn the public side of real estate or part of the public side of real estate would be worthwhile. That I always wanted to work
00:12:10
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on in the private sector, but at the same time, knowing zoning and regulatory issues that impact commercial real estate would be additive to me. And it definitely was. I ended up writing a master's dissertation on the securitization of commercial real estate. The verdict remains out. Commercial real estate had not been securitized at that time.
00:12:32
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But it was definitely in the air. And so I wrote this master's dissertation and then come out. I come out of grad school and soon thereafter, commercial mortgage backed securities lending space emerges. And so I was able to get in kind of on the ground floor of that and ride a wave.
00:12:50
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And that business really boomed. And that was obviously advantageous to my career. At some point, I found myself at LaSalle Bank, ABN AMRO in Chicago, starting ACMBS, a conduit lending platform for
00:13:07
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LaSalle Bank, and that ended up being a very, very sizable business for LaSalle. And so being aware of opportunities, the kind of very, very macro opportunities and seizing on that and being on the ground floor certainly was advantageous to my career.
00:13:28
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Do you think that there is still a significant advantage for young people to kind of gain as much exposure as they can to the public side of commercial real estate as you did? Because it sounds like you really rode the wave of securitization, like you kind of started in this industry at exactly the right time to connect these two worlds that you were involved with.
00:13:46
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Right. So I made some real estate background in leasing and on the financing side with not a lot of clarity. But then when I went to grad school and was able to move into the CMBS space, that's where things the dynamic really changed quite a bit for me.
00:14:06
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Would I tell people to go into regional urban planning studies as a means of getting into commercial real estate? No, I don't think so. If you're interested in government and the workings of municipalities and counties and land use, sure, but to get into real estate the way I did, probably not.
Advice for Young Professionals
00:14:32
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If you could then go back to your 20-year-old self, what advice would you give professionally? A few things. One is, I think, picking up the ball is important. A lot of people stand around and wait for the ball to be handed to them. You have to go in and recognize that there's a ball sitting there on the field that needs to be picked up, and then to move that ball downfield too.
00:14:56
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to engage, to be tenacious, to identify opportunities and pursue opportunities and not wait for things to be handed to you. That won't happen a lot. And then there's a quote that comes to mind, argue for your limitations and they're yours. So
00:15:13
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Oh, that's not my job. That's outside of my responsibilities. Maybe I don't have the right skill set for that. That's how you think your career will stagnate. But if you think, yeah, I'm probably pretty capable at this. And if I could just pick up that ball and I could move it forward, I can do that. So really believing in yourself, I think, is very, very important.
00:15:37
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And not to get frustrated. There'll be setbacks, you know, for sure, to accept that, you know, you'll make mistakes. But don't be afraid of that and don't be paralyzed by that. So when it comes to picking up the ball and taking advantage of opportunities, do you have concrete examples in mind of like how somebody who's on the precipice of graduating from college might actually dip their toe into the world of commercial real estate? Like, what are the right opportunities to take, if that makes sense? Right.
00:16:06
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I think you need to build your resume throughout college if you just show up with having been a bagger at a grocery store that doesn't show a lot of them and bigger. So I do think it's important to try to be connected in the broader space to make sure that you're developing.
00:16:24
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your resume above and beyond just your degree. Just having a good degree and being at the top of your class isn't going to be enough.
Navigating Real Estate's Cyclical Nature
00:16:33
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You have to be able to tell a more fulsome story and those summer internships are critical. I know they're very, very hard to obtain but that's, you know, I think critical to coming out of school with and setting yourself apart from others.
00:16:48
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And not necessarily staying at the same firm each summer, although, you know, that's probably an easier path to go. But the more little stories that you can tell when you sit down for your interview, someone's going to ask you a question, you know, how was your
00:17:05
Speaker
summer internship at so-and-so company, and that might just be one story. Maybe you worked for that company for three years, and there's a story to be told behind that, but probably more interesting if you worked for two or three different companies over the course of your summers. Great. You become a working prospect.
00:17:22
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And finally, joining the Real Estate Club, finding different ways to engage, joining the Harold Eisenberg Foundation or something along those lines to fully demonstrate that you have a firm interest in this and that you're committed to a career in this space.
00:17:42
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Yeah. Okay. What did the rest of your professional trajectory look like? I know you worked at a variety of firms before becoming a leader at a line credit union. So can you give us a little bit more, more insight on those years out of college? So one thing that everyone needs to expect if you're going into a real estate into commercial real estate is, uh, it's a very cyclical business and there are lots of booms and busts. And so when,
00:18:10
Speaker
When the market is booming, particularly if you're in an investment sales role or some kind of commissioned role, don't think that money is going to continue forevermore. When you have those great phenomenal years, sock that money away and accept the fact that there's going to be some years that aren't going to be good, but stick it out.
00:18:30
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ride the different cycles and don't be naive as to the boom and bust nature of real estate. Try to mitigate that impact on yourself, but recognize that it
Role at Alliant Credit Union and Asset Management
00:18:45
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happened. Part of my career has been spent in troubled assets and workouts and dealing with the bust side of the cycle. You can learn an enormous amount
00:18:56
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you know, when that happens, how to deal with troubled situations and make the best of a difficult time. Yeah, absolutely. What exactly did that look like when you say troubled assets?
00:19:09
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So now we're going through it, you know, real estate, their interest rates have gone up significantly. And there are decent number of loans that we made on a floating rate basis. And we stressed these loans by 200, call it 200 basis points, but the market moved up 500 basis points. And so now we have
00:19:30
Speaker
a handful of loans that are not able to service their debt in accordance with the contractual agreements that existed when we made these loans. And so having conversations with borrowers about how they're going to curtail their balance, their loan balance, probably over a time rather than all at once, trying to figure out how we move some of these floating rate loans into fixed rate loans, just working through a whole
00:19:59
Speaker
bunch of different scenarios trying to make sure that the outcome is advantageous both for the lender that I work for as well as for the borrower. Trying to find that sweet spot that improves the situation for both of us.
00:20:18
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Earlier in my career, I worked for a large regional bank that had a lot of commercial real estate on its books. And lo and behold, they go into the Great Recession, and they're closing, they're taking back properties. And once they had taken back these properties, I got involved in disposing of them. And there was all sorts of different
00:20:40
Speaker
scenarios at play from raw land to office buildings to retail properties to office condominiums and trying to figure out how to dispose of those properties in a very thin marketplace and getting the best execution.
00:20:58
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At times it led me, one scenario led me to a big piece of land that was supposed to be this big mixed use development. And I found myself walking into the mega church that abutted this piece of land and meeting with the pastor and talking about, you know, selling them this piece of land.
00:21:16
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You learn that the person next door down the street from this property probably perceives value in this property in a way that the broader marketplace may not. Yeah. I'm really curious here. Having seen the chaotic fallout of all these bust periods, are you investing in real estate yourself, like in any particular asset class?
00:21:38
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I do not invest in real estate primarily because so much of my livelihood really depends on real estate anyways. So I never felt compelled to directly own real estate. It's a very, very difficult thing. Some people are cut out for it. Some aren't, and I'm honest with myself. I'm not.
Building a Successful Future by Being Present
00:21:58
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Do I aspire to have a young person approach me one day to seek me out as an investor or kind of as an advisor? Yes, that hasn't happened yet.
00:22:08
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which I'm surprised by because I've been a great mentor over the last 35 years to a lot of younger people. But I haven't received that phone call yet. Wow. Okay, take notes listeners. That's awesome. And you mentioned I guess I kind of
00:22:24
Speaker
dear to the conversation a little bit off track. When your previous point mentioned talking to that megachurch pastor, what exactly does your everyday look like as a commercial lender? If you could just give a little bit of an overview of what capital markets is as an industry and your particular role within it, at least at a line credit union, like your most recent role.
00:22:44
Speaker
So aligning credit union is the successor credit union to United Airlines employee credit union. And it is one of the largest credit unions in the country. We're all digital. And from a real estate perspective, we lend nationally, which is neat. And we lend on all property types. During the frothier times, when it was more of a boom economy that allowed us enough profitability
00:23:11
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and leeway to experiment with some asset classes that are a little bit non-traditional. We financed some parking lots and kind of experimenting with it. We financed some parking lots and our experimentation even took us to financing a glamping park. So we were involved in financing mobile
00:23:29
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For mobile home parks, we included some RV elements to that. And then that took us even as far as one glamping park in rural Oregon and on an experimentation kind of basis. So really neat that I get to learn about different asset classes and different property dynamics. But the day to day, twice a week, we have a deal screen session. Our originators bring in, they see
00:23:56
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billions and billions of dollars worth of commercial real estate lending opportunities. They sort through those and they show up twice a week at our deal screen sessions with two or three transactions that they think meet our criteria from a return perspective and a safety and soundness perspective.
00:24:14
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And as a team, we discuss these opportunities. We ask questions about them. We decide whether we want to issue a financing quote on these opportunities. And it's really great having the whole team participate, both very experienced people and some younger folks on the team, because everyone's perspective.
00:24:34
Speaker
is impactful and allows us to make a lot of smart decisions. And then part of my week is unfortunately spent in troubled loan conversations, working with my team of specialists to decide our approach on a transaction. Are we really going to foreclose on it? You know, is there a restructure that actually might be more advantageous than spending a whole bunch of legal fees and going down this rabbit hole or not?
00:25:01
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I sell loans. I head up a group that also sells loans. In addition to commercial, we sell consumer and residential loans. We buy loans as well. But on the commercial side, we may sell a participation in one of our loans to another credit union.
00:25:18
Speaker
And the reason we do that is we might want to limit our geographic exposure. We might want to limit our exposure to a single borrower. We might want to limit our exposure to a particular asset type as we work to have a balanced portfolio and manage our overall kind of risk exposure. Okay. How many years did you spend as an analyst where you were becoming familiar with the
00:25:42
Speaker
the underwriting process and just developing the capabilities to get to the point where you are now where you're able to have meetings about a whole bunch of deals and just kind of high level determine whether or not you want to get involved with them. Say looking back, you know, probably five years. Yeah.
00:25:59
Speaker
you know, as an analyst before I started to become, I became a loan originator for CNBS. And I traveled around the country, met with commercial mortgage brokers and sourced opportunities that were appropriate for the construct of a CNBS securitization.
00:26:19
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And at one point then I started specializing in small balance loans. I put together a very tailored program that allowed us to pull all loans from, I think at that time it was $500,000 to $5 million, and to pull these loans and issue a security that was backed by the cash flows of these loans.
00:26:40
Speaker
And just being able to be kind of a pioneer in a pioneering business was great for me when CMBS kind of came to a halt with the Great Recession. Then I got into troubled loans. And then as we came out of the Great Recession, I definitely had a few years of where I struggled to find my footing. And then eventually I landed at Alliant Credit Union and took over a very small lending platform and significantly through that platform.
00:27:09
Speaker
Okay, so it really sounds like your expertise relied on really taking advantage of how your industry evolved. And I'm wondering if you are super honest looking back on all of your in-classroom educational experiences as you were growing up, like to what extent did they actually put you in a position to learn as quickly as you did just like about your industry? Like how important was college and academic just education in general to your journey?
00:27:37
Speaker
I would say college equipped me with the fundamental skills that were necessary for me to move forward and to move into more complex financing arrangements. So college was very instrumental in that respect. Grad school
00:27:57
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allowed me to, again, kind of deepen a holistic understanding of the commercial real estate space, but it also allowed me to make a lot of international contacts that have really served me well over the years. And then at one point in time, I went back and got an executive scholar designation from Northwestern
00:28:18
Speaker
as well. And I think it's always important to be a lifelong learner, to be curious, to approach meetings as if you are having to go back after this meeting and write an article about that person that you just spoke to. So be very inquisitive and listen to others. Learn and listen from others and show genuine interest in what these people do and the knowledge that they can bestow upon you.
00:28:46
Speaker
Yeah, absolutely. Looking at all these people that you work with and are inspired by, do you like have any particular goal for yourself professionally or even personally in the next five to 10 years? Like what are you building towards? I hate that question.
00:29:02
Speaker
Where do you want to be in five years? I've always focused on being the best at what I am doing in the moment and letting that carry me forward.
Establishing Expertise Through Writing and Media Engagement
00:29:12
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So not getting too wrapped up on this, you know, this future of unknowns, but creating a good future for myself by really honing in on the here and now.
00:29:23
Speaker
Do you? Unfortunately, we are about to end, be out of time, but write articles, weigh in on things on LinkedIn. Make sure that you are out promoting yourself and your knowledge, not in an egotistical, arrogant way. Bring something
00:29:44
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legitimate and real, you know, to the equation, think deeply, go to local conferences, listen to the speakers, integrate those ideas, write something, and approach a real estate trade publication, and ask them if there's an ability for them to run an article, an 800-word article that you've written on some kind of cutting-edge subject matter.
00:30:09
Speaker
Yeah. Interesting. I've never heard that mentioned before. It's a great idea. So I started doing that early on in my career. Kind of learned that from Goldie Wolf about seeking out reporters, making sure that I was adding value to them, and eventually having them look to me as an expert. Right. You're creating a product that other people can learn from. Yeah. Charles, thank you so much. It's probably going to take me three or four days