News
BACK TO REALITY
October 27, 2010
| As one of our attendees noted at this morning’s Bisnow Breakfast & Schmooze, “Distress leads to success.” Perhaps that’s why 175 of you joined us at the Cornell Club to hear about the distress and opportunities from some of the hottest names in capital markets. |
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| Greenfield Partners CEO Gene Gorab, Blackstone Group senior managing director Michael Nash, and Arent Fox partner David Dubrow, moderator. Stuy Town is one of the most notable examples of what special servicers have to deal with today, Michael says. There’s been a seat change, and special servicers are now more likely to take back properties and put the burden on the owner. It’s going to take time to unwind these securitizations, says Gene, who expects a lot of law firms to do well (guess we’ll have a harder time reaching David). People who have paid big multiples for perceived special treatment are a little too optimistic on how this will play out. |
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| Brookfield Asset Management managing partner Andrea Balkan, Dune Real Estate Partners CEO Dan Neidich, and Eastdil Secured managing director Nicholas Seidenberg. We’re seeing an evolution from pretend and extend, Andrea says—but if you’re willing to pay market rates and meet differentials, you can refinance. Special servicers are selling smaller balance sheet loans, Nicholas adds; account officers are overwhelmed, and they won’t have a big value recovery in the long term. It’s a lot different from the early ‘90s, adds Gene—we’re talking about a $1M portfolio with 15 assets from Decatur, Ga. |
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| There will be plenty of maturities coming due in the next three years, the speakers say. Gene notes a different posture in bigger banks, who now have to “face reality” with regulators losing patience with what the banks are sitting on. (Speaking of posture, we call the one above "edge of your seat.") But the CMBS market is back and active, Michael says; he expects $10B of $15B of issuance this year, and up to $33B next year. Dan adds that over the next six months, we’ll see a pickup in activity with a reasonable number of opportunities. Right now, he’s seeing foreign banks differentiating between strategic and non-strategic markets. Expect larger deals to be sold individually, and smaller ones as portfolios. |
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| Thanks to sponsor Arent Fox for helping make this event a success. David says the event was important given the timing: The main way to purchase property is to deal with debt structures, and you have to understand these structures and opportunities that come with debt. Resolving these issues will drive the capital markets. The panelists also discussed the FDIC and the assets in the market; they say the banks that went first brought lousy product to the fold, but the better assets will come later. |
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| NYU’s Kali Valenzuela, American Land Services’ Marc Lawrence, Flushing Bank’s Robert Mathes, and Colgate Real Estate’s Larry Haber. Instead of Milky Ways and candy corn for Halloween, Robert tells us his bank is aggressively seeking and collecting past due loans. Marc is seeing small loan sales and commercial refinancing pick up—there aren't a lot of large commercial deals, but they’re out there. He says many people are out and about looking for private equity partners to move forward with deals, and he’s been playing matchmaker more than title insurance salesman. Larry told us what’s on his mind by channeling some Elvis Costello: “What’s so funny ‘bout peace, love, and tenant retention?” |
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| Watermill Equities’ Michael Shuit, CNY Builders’ Ken Colao, Landstar Title’s Marco Botarelli, and Fidelity National Title’s Tim Oberweger. Tim says as 2010 winds down, there will be opportunities for larger transactions and refinancing; he believes we’re headed in the right direction and will end the year stronger than the Yankees. Marco tells us he's been involved in some substantial insurance transactions recently, including co-insuring the Mount Sinai refinancing and closing on an Upper West Side residential high-rise for $20M. |
