News
HALFWAY THERE
May 7, 2010
| Optimism prevailed as investors, developers, brokers, designers and public officials packed a Boston Convention & Exhibition Center meeting room for NAIOP's fifth annual business conference yesterday. When one panel moderator, Goodwin Proctor's Andy Sucoff, asked for a show of hands, only a couple of pessimists registered a vote for ?I'm more worried this year than last.? |
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| On Andy's panel we snapped the Boston Fed's Lynn Browne, FDIC?s Kathy Kalser and Barney Frank counsel James Segel. Lynn says optimism is justified. New England has fared a bit better than the nation during the recession unlike the big dip in the 90?s when it did worse. She expects the current macro growth to build into a moderate recovery but with difficulty to secure credit, add jobs and reboot consumer spending. Kathy assured the FDIC is aware of ?challenges borrowers face' as banks continue to wobble or fail. But of the 200 failures since early '09, only one has been in New England. James outlined the financial reforms he hopes Obama will sign by July 4th. We'll get back to that. |
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| The US Treasury's Matthew Kabaker, who we snapped after his keynote, told the crowd that Treasury shares CRE?s goals and is listening to its recovery ideas. The economy, he says, has revived markedly since financial collapse loomed thanks, in part, to federal actions to stabilize financial institutions and avoid large scale liquidation of CRE assets, doing it all for $120B, not the $500B anticipated. CRE prices seem to be leveling, but vacancy is up, rents down, deal volume low and construction/development loans troubling. To avoid another meltdown, James Segel said financial reforms will assure derivative trades are transparent and reported; elevate consumer protections; decrease bank leverage, systematically regulate banks/shadow banks and establish an authority to guide orderly dissolution of failing entities. |
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| Paradigm Properties' Kevin McCall asked one of many audience questions: how will you make sure investors have capital and owners have incentives to sell? Matt says the FDIC will be a responsible and innovative seller since many of its decision makers experienced and learned from the '90's cycle. Asked if mark to market requirements will change, Kathy responded that it isn't a surprising question since construction and development loans are among the riskiest banks hold. How can banks work through troubled portfolios and help developers re-start projects to get people back to work? James said next week Frank's Financial Services Committee will ask the SBA for more ideas and assured the audience that reviving CRE is a top Washington priority. |
