By Taylor Gulbins (GSB ’14)
Earlier this month, Mr. Douglas Hansen, vice chairman of Redwood Trust, visited the Gabelli School as a distinguished guest speaker in Professor McSween’s Real Estate Finance and Capital Markets class. Redwood is one of the largest and most successful REITS in the United States, headquartered in San Francisco.
His topics? Real Estate Investment Trusts (REITs) and strategies that steered his firm through the 2008 financial crisis.
With a background in investment advisory, Mr. Hansen advised banks on securitization in the early 1990s and soon after, co-founded Redwood Trust Inc. to capitalize on the growing REIT market. Redwood Trust’s business centers around investing in residential mortgage loans, commercial loans and other forms of commercial real estate financing, as well as mortgage-backed securities.
Mr. Hansen discussed Redwood’s approach to securitization, where mortgage loans are bundled together and sold to investors. More than a decade ago, the firm’s leaders foresaw that the real estate market could not sustain itself and in turn, sold 40 percent of its assets to pay off its debt. That strategy enabled Redwood to weather the financial crisis of 2008. Later, the development of an internally created proprietary software system that acts as a loan acquisition platform between the trust and mortgage originators transformed Redwood’s securitization process. The platform guarantees the sale of loans for originators based on borrower’s credit.
Mr. Hansen, who studied at Harvard University as an undergraduate and then at Harvard School of Business for his MBA, has recently moved to New York.