CMBS Pioneer Ethan Penner To Give Closing Keynote At Bisnow’s Elevate Retreat
Next month, the most promising up-and-comers in the commercial real estate industry will meet up at the 1 Hotel Nashville for Elevate, Bisnow's newest CRE retreat. From Aug. 16-18, these rising stars will not only network with their peers, but also with some of the most well-established names in the industry. They will have the opportunity to gather together and learn from those who have walked the path to CRE success before them as they build connections that will last the rest of their careers.
Among the notable CRE leaders who will be speaking at Elevate is Ethan Penner, founder and CEO of Mosaic Real Estate Investors, who is cited in the industry for establishing the commercial mortgage-backed security — or CMBS — landscape in the 1990s. While lenders were moving away from real estate at the time, Penner brought billions of dollars of desperately needed liquidity into the industry. By introducing CRE to the capital markets, he not only opened the door for massive capital that helped to buttress the industry to this day, but he also created a new lending paradigm that brought pricing logic and a bond trader’s level of responsiveness that is invaluable to borrowers to this day.
At Elevate, Penner will be interviewed by Ackman-Ziff President Simon Ziff in a closing keynote. He will discuss his upcoming book Greatness Is a Choice, his personal and professional experiences and the steps the CRE industry can take to navigate adverse global events.
Penner said that embracing networking opportunities at Elevate will be a pivotal experience for people focused on building up their careers in the industry.
“Elevate is so valuable in that it helps to build a great future for the industry by cultivating great up-and-coming talent and by facilitating the important personal relationships that will be the foundation of much of what will happen in the industry in the next 50 years,” Penner said.
Bisnow sat down with Penner to talk about determining the viability of CRE assets in a turbulent economy, how certain values can transcend CRE to other industries and the importance of building relationships at events such as Elevate.
Bisnow: How can industry professionals navigate the CRE and CMBS landscapes during this time of economic uncertainty?
Penner: Today’s market is characterized by tremendous uncertainty caused by a unique combination of rising rates, slowed rental growth and a rapid acceleration of obsolescence risk — all coming on the heels of a historic period of complacent optimism during which low rates and a severe overflow of investment capital led investors to price deals to perfection.
The first thing to do now is to determine whether the real estate owned or funded is, in fact, viable, meaning do and will people want to enjoy life within its walls or not. Unfortunately, today’s downturn is the first one in modern times that is not largely or solely driven by financial market pressures but also by a viability problem. If your asset is not viable then there is little hope for recovery, and taking your lumps and moving on would be the right move.
Once that has been solved, the second issue is staying power. For viable assets that were priced in a different interest rate regime, or priced with optimistic rental growth assumptions that haven’t panned out yet, staying power will be the key to optimizing outcomes. It is likely that over time either interest rates and cap rates will both decline or, if not, then persistent inflation will cause rents to climb for desirable properties. It is even possible that both may occur. Having the staying power to last without losing assets to foreclosure or being forced to sell at today’s prices will be the critical difference between winners and losers.
Finally, having strong operational expertise to extract optimal value from assets will also be important. In all likelihood, it will be a prerequisite for being granted staying power by lenders and/or investors.
Bisnow: Your book Greatness Is a Choice, coming out in the fall, helps readers embrace new ideas and critical thinking strategies. How can CRE professionals, especially those who are just starting out, adopt this way of thinking to be successful in the industry?
Penner: Each chapter has a unique message or point, all of which I believe will be of significant value to CRE professionals in one form or another. The book’s ideas and insights are those that I have gathered from having lived a pretty unique life, and obviously much of that has been as a CRE and Wall Street financial professional. So, given that I am part of the CRE world, I would imagine that those from that world will probably find some unique value that perhaps others who don’t share that same background with me will not.
Bisnow: What inspired you to write a book that can be applicable to people in industries beyond CRE?
Penner: I have always been a student of life and human behavior. My success in CRE and on Wall Street emanates from observations gleaned from paying careful attention to these things and applying the many lessons that I’ve learned. For example, I have learned how valuable it is to ask the question “What unmet needs exist that I can help address?”
It was this way of thinking that led me to create the CMBS industry in the early 1990s when all lenders abandoned CRE simultaneously, leaving borrowers with refi needs facing dire situations. I realized that these observations I had during my career and the lessons that I learned were very broadly applicable and valuable well beyond my chosen profession. In fact, understanding the intersection and thus interconnectedness of all things is something that I discuss in the book and helps explain how I saw these ideas having very broad application and value.
Bisnow: What drew you to Elevate? Without giving away too much of your upcoming discussion with Simon Ziff, what is one insight you hope attendees gain from your keynote?
Penner: I have long been a fan of Bisnow events, having participated many times as a contributor as well as a member of the audience.
I was blessed with mentors who generously shared their lives and their experiences and lessons learned with me and have always enjoyed paying it forward. I have been teaching a class at graduate business schools for the last decade and have enjoyed that immensely, and I have also learned much from the discourse with younger generations. Finally, I adore Simon Ziff and want to be a part of anything that he’s involved with.
As to the question of sharing one unique insight, my book has 69 chapters each with its own insight and all of which I believe are very valuable. If I were to share only one now, it would be the massive importance of personal responsibility. Clearly, there are many forces at work at all times, and our life outcomes are so dependent upon variables outside of our control. However, if we don’t seize responsibility for things in our life, I truly believe that we undermine the potential for fulfillment and joy, and learning and growing that are available to us daily.
This story was produced by Studio B, Bisnow’s in-house content and design studio. Bisnow news staff was not involved in the production of this content.
