Axonic’s investment decisions and thematic views reflect the judgment of the professionals behind them – each bringing a distinct approach as well as deep expertise in a specific part of the market.
Axonic Insights is launching a regular Q&A series exploring the experiences and perspectives of Axonic’s investment professionals. One Axonic team member will be featured in each installment, rotating across Commercial Real Estate (CRE), Commercial Mortgage-Backed Securities (CMBS), Residential Mortgage-Backed Securities (RMBS), Asset-Backed Securities (ABS), and Alternative Private Lending.
To kick off this series, Axonic is spotlighting Erik Nygaard, Principal and Portfolio Manager on the Commercial Real Estate team. Erik practiced real estate law before moving to the investment side and has been with Axonic since 2019. Erik’s Q&A covers how his legal background impacts his approach to evaluating investments, what distinguishes “opportunistic” from “distressed” real estate, and where he sees the most compelling opportunities in today’s market.
Read on for more from Erik, and click here to learn more about Axonic’s Commercial Real Estate sector.
1. What first drew you to commercial real estate, and what brought you to Axonic?
What first drew me to real estate was its tangible nature – you can see and touch the assets. It’s also unique among financial fields in that it doesn’t have the same barriers to entry. Private equity, hedge funds, banking – those worlds favor a certain pedigree. Real estate draws from a much broader range of backgrounds, in part because everyone interacts with it personally, so people can start small and build from there.
What brought me to Axonic was its horizontally integrated platform – the ability to invest across the capital stack, in both public and private markets, and across debt and equity, rather than being siloed into one segment of the market.
2. As a Portfolio Manager for the opportunistic strategy, what are you doing day to day?
No two days look the same. I’m managing the accounts and their underlying investments, sourcing and executing new deals, fundraising, managing the team, and sitting on the CRE investment committee for other business lines. That mix is what makes the role interesting.
3. You started your career in law before moving to the acquisitions side. How does that background shape the way you look at opportunities today?
It was an incredibly helpful foundation for understanding how the pieces of a transaction fit together. As a lawyer, I worked on acquisitions, dispositions, and financings on both the lender and borrower side, joint ventures, structured deals, and CMBS – real exposure across commercial real estate finance and law. That’s proven directly relevant at Axonic, since we’re active across all of those structures ourselves – as JV counterparties, as senior and subordinate lenders, as a borrower with senior and subordinate debt, and in CMBS. Knowing how the documents work and why deals are structured the way they are, legally and tax-wise, gives you the full picture.
Most people in this industry build an underwriting foundation first – heavily in Excel – and grow into negotiating documents over time. I came at it backwards: I started with the legal foundation, executed deals, then worked back into the underwriting. I’d always been comfortable with numbers, so that’s a skill set I built deliberately while still practicing law.
4. Axonic invests across both debt and equity in commercial real estate. From your seat, what does that flexibility mean in practice?
Flexibility means being able to move with the market and find relative value across the capital stack. We saw that play out over the past couple of years: as debt markets reopened and repriced, then equity followed, it created opportunities to lean into whichever side offered the better risk-adjusted return at the time.
It also means seeing both sides of the table. When I’m negotiating as a lender, I can think through how a borrower is likely viewing the deal, and vice versa – that helps not just in negotiating, but in understanding where the real risks sit.
5. When an opportunity comes across your desk, what do you look at first?
With opportunistic investing, I start with downside – this is where we’re taking the most risk relative to anything else at the firm, so the return has to justify it. Then: why are we winning this deal? There’s no shortage of smart, well-capitalized investors, so what’s our edge – how does it fit with what we’re already doing, what positional advantage or insight do we have, and how does the underwritten return compare to other opportunities in the market?
6. What do people most commonly misunderstand about opportunistic real estate?
People often say “distressed” instead of “opportunistic,” which implies the asset itself is underperforming or needs repositioning. We see it differently: we’re looking for good assets with bad capital stacks. The distress is in the capital markets – pressure from how the deal is structured, or from rates sitting well above where they were when it was originally financed – not in the asset itself. The leasing can be strong and the property well-run; it’s stuck because of the capital stack, not the building. That’s a distinction we often have to walk investors through directly.
7. What are you and the team generally seeing across commercial real estate right now, and what are you finding most interesting?
We’re still seeing real capital stack pressure from rates sitting well above where they were. That shows up as valuation stress (wider cap rates), cash flow stress (higher interest costs), and refinancing stress, where both combine as deals mature into this environment. Office tends to see more valuation pressure, multifamily more cash flow pressure, but it’s the same underlying stress across asset classes.
What’s most interesting to us is less about any single deal and more about the volume of one-off opportunities where we have a structural or positional edge – a lot of that comes from our horizontal integration across debt, equity, and CMBS, which gives us a differentiated view of the market.
Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Axonic Capital LLC to buy, sell, or hold any security. Views and opinions are current as of the date of this blog post, may be subject to change, and should not be construed as investment advice. This post is not an offer to sell or a solicitation of an offer to buy any interest in any fund or account. Forward looking statements are not guarantees of future results, and all investments involve risk, including loss of principal.