ATLANTA – On Thursday, September 19th, REIAC held its Third Quarter Debt Conference in conjunction with CREFC, the Commercial Real EstateCouncil, at the JW Marriott in Buckhead. The event was entitled "Good Old Days or a New Normal?", and was focused on the state of the lending/debt business in commercial real estate. The program was attended by over 200 real estate professionals.
The panel consisted of four senior leaders in the business: Paul Vanderslice, co-head of lending for Citibank; Dave Shillington, managing director for KeyBank's lending activities in the southeast; Peter Scola, co-head of national lending for Cantor Commercial Real Estate; and George Carleton, managing director for C-III Capital Partners. The current president and CEO of CREFC, Steve Renna, moderated the event.
Mr. Vanderslice emphasized the re-birth oflending, with over $45 billion of new CMBS transactions closed to date in 2013. Interest rates have increased rapidly from their historic lows in the spring, and Paul expects a continued increase from this point as the economy recovers. Peter Scola remarked that the competition is heating up, as more lenders enter the market. One of Cantor's main benefits to borrowers is certainty of execution, Scola said.
Dave Shillington spoke of the breadth of the Fannie Mae and Freddie Mac lending programs for multi-family, with over $50 Billion a year in mortgage closings from Freddie and Fannie. With the government mandate to reduce commitments in the GSE's by 10% per year, it remains to be seen whether insurance companies, banks or CMBS lenders will pick up the business. George Carleton spoke of the many different layers of debt which can be arranged/provided by the CMBS lenders on Wall Street, and the creativity of the market in dealing with recovering properties. C-III handles all aspects of the loan servicing business in addition to originations.
A major concern expressed by the panel was the tremendous volume of maturing loans in the upcoming 2015-2016 period, estimated at hundreds of billions of dollars. The challenge will be the ability of lenders and borrowers to refinance these debts upon maturities, given projected changes in valuation and rising borrowing costs.
With insurance companies capped at about $50 billion in annual production and major banks still recovering from the downturn, most expect CMBS programs to continue to grow. Relative to the past, interest rates are still low and opportunities to borrow for acquisition and refinance are increasing every year. Creative capital stacks are again being engineered to handle various loan demands.
All of the panel members were generally optimistic as to the health of the commercial real estate market across the country, with the multi-family business remaining "hot". If interest rates remain relatively stable, 2014 should also be another strong year for borrowers and lenders.
The REIAC Third Quarter event was made possible by ATC Associates Inc.; Crown Advisors: Habif Arogeti & Wynne; Georgia State University; Grandbridge Real Estate Capital; Georgia State University; McKenna, Long & Aldridge; First American Title Insurance Co.; National Real Estate Investor; and Cantor Commercial Real Estate. Paul Berry of CBRE, John Beam of Centerline and Brian Olasov of McKenna Long & Aldridge coordinated the program.
The Real Estate Investment Advisory Council (REIAC) was established as a nonprofit trade association to provide a forum for the exchange of ideas, concerns and experiences among senior executives who conduct commercial real estate transactions. An exclusive national fellowship of top real estate executives that offer superior educational events, networking opportunities and community service, REIAC’s institutional quality programs are presented in a social environment where members can share experiences and knowledge with their peers. Our events encourage members to broaden horizons and develop personal relationships that further their success within the industry. To learn more, visit www.REAIC.org.