CRE FINANCE COUNCIL - JUNE ANNUAL CONFERENCE WRAP-UP
On Wednesday, CRE Finance Council concluded our June 2012 Annual Conference in Washington.
We thank the 900 industry participants who attended the three days of programs, meetings and discussions. A special "thank you" goes to the four Conference co-chairs who worked tirelessly over the past several months to put together our outstanding program: Keith Gollenberg, Oaktree Capital Management, L.P.; Richard D. Jones, Dechert LLP; Gregory M. Michaud, ING Investment Management; and John M. Mulligan, Fundcore Finance Group LLC.
We once again congratulate Kim Diamond of Kroll Bond Ratings on her receipt of the 2012 CREFC Founder's Award - well-deserved recognition for her outstanding work for the association over the years. Thanks also go to outgoing Board of Governors President Jack Cohen for his tremendous work in leading CREFC over the past year. We would also like to thank all of our outstanding sponsors for their generous support of our June Conference.
CREFC also appreciates the valuable comments and feedback we received from Members and non-Members regarding the panel discussions, Forum meetings, speakers, and topics discussed during the Conference. We appreciate them all and will be working to incorporate them into the planning for our next Conference at the Loews Miami Beach Hotel from January 14-16, 2013. Your suggestions for additional topics of interest will also be reflected in the After-Work Seminars being scheduled for the balance of this year.
Our Conference events are beginning to generate some good coverage by the media and on industry-related blogs. Summaries and links to the stories published to this point are provided here as a "snapshot" of what we hope you found to be a worthwhile and successful event.
Curry Asks Banks for More Rigorous Commercial Real Estate Analysis (Wall Street Journal)
At a Wednesday morning appearance at CREFC's June Annual Conference, Comptroller of the Currency Thomas J. Curry directed banks and thrifts to begin more rigorous analysis of their CRE exposures in the face of continuing headwinds and a possible rise in interest rates. According to Curry, while signs of improvement in CRE markets can be seen, he has to "be more concerned about the very strong headwinds these markets and their lenders still face. (Read the full story here.)
Office of the Comptroller of the Currency Press Release: "Comptroller Highlights Commercial Real Estate Credit Risk" (Read the release here. A copy of the Comptroller's full remarks is available here.)
Commercial Mortgage Repeat Defaults Poised to Increase, RBS Says (Bloomberg)
Richard Hill with Royal Bank of Scotland Plc. says that commercial mortgage defaults are poised to continue rising. In an interview conducted on the opening day of CREFC's June Annual Conference in Washington, Hill said, "The re-default rate is going to be significantly higher than many market participants think. For some of these loans that were modified in the past three years, the rubber is finally meeting the road." Data compiled by Bloomberg reveals that nearly $30 billion in commercial loans is currently being handled by special servicers. (Read the full story here.)
Low Interest Rates Create New Layer of Risk for CMBS Deals (Fox Business)
The CMBS market is facing new headwinds as a result of the extended period of unusually low interest rates. Consequently, dealers may be forced to offer mark-downs or offer floating-rate debt on new fixed-rate CMBS to attract investors. Harris Trifon with Deutsche Bank said, "It's very difficult to sell 10-year CMBS right now. It's not that people aren't happy with the asset class. It's more about the yield." Stephen Schwartz with RBC Capital Markets says there has been a decided preference for bonds with lower credit and interest-rate risk in the secondary markets. (Read the full story here.)
Housing Recovery: The Pieces are There, But the Certainty Isn’t (National Association of Realtors blog)
In remarks delivered to more than 800 attendees at CREFC's June Annual Conference, NAR Chief Economist Lawrence Yun said the housing market should continue on the road to recovery despite lingering uncertainties which could still derail the market. These challenges include the ongoing crisis in Europe, modest improvement in the U.S. economy, tight mortgage lending, and lagging gains in employment. While home sales have been flat in the past four years, NAR is forecasting an increase to about 4.6 million sales by the end of this year. Yun also discussed NAR forecasts on the future of CRE markets in the U.S. (Read the full post, including the complete slide presentation, here.)
Ongoing Events
Registration / Information
Sponsored by: KeyBank Real Estate Capital
Cyber Café
Sponsored by: Andrews Kurth LLP, Bloomberg, Cantor Fitzgerald, LNR Property Corporation
Monday 8:00am – 5:00pm
Tuesday 7:30am – 5:00pm
Wednesday 7:30am – 10:45am
Exhibit Hall
Monday 11:00am – 7:00pm
Tuesday 8:00am – 7:00pm
Continuous Live Financial News
Sponsored by: SNR Denton
Monday, June 11, 2012
Continental Networking Breakfast in Exhibit Hall
8:30 – 9:30am
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Co-Sponsored by: CIBC World Markets Corp. and Standard & Poor’s, Salons D,E
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CRE Finance World Editorial Board
9 – 10am
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Policy Committee (Closed)
9 – 10am
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High Yield Debt & Investment Forum
11am – 12:30pm
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Issuers Forum
11am – 12:30pm
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Portfolio Lenders Forum
11am – 12:30pm
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Boxed Lunches in Exhibit Hall
12:30 – 2pm
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Co-Sponsored by: Intex Solutions, Inc., Katten Muchin Rosenman LLP and KPMG LLP, Salons D, E
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B-Piece Buyers Sub-Forum (Limited to B-Piece Buyers)
1 – 2:30pm
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IG Bondholders Sub-Forum (Limited to IG Bondholders)
1 – 2:30pm
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Sponsored by: Moody’s Investors Service, Salon IV
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Servicers Forum
1 – 2:30pm
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General Session: Welcome
3 – 3:30pm
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Roundtable Discussion: Market Issues and Opportunities
3:30 – 5pm
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Opening Network Reception
5 – 7pm
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Co-Sponsored by: Cadwalader, Wickersham & Taft LLP and Citigroup Global Markets, Salons D, E, F, G
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PAC Donor Reception
5 – 6pm
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Garden Terrace B (Lobby Level)
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Next Gen Reception
6 – 7pm
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Garden Terrace B (Lobby Level)
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Tuesday, June 12, 2012
Continental Networking Breakfast in Exhibit Hall
7:30 – 9am
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Co-Sponsored by: CIBC World Markets Corp. and Standard & Poor’s, Salons D, E
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Forums Chairs Report
8:30 – 9:30am
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Gauging European Sovereign Distress & Global Impact
9:30 – 10:20am
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Speakers:
Faisal Ashraf, Head of Commercial Real Estate (Asset Finance), Credit Suisse
Steve Franck, Senior Director, Alvarez & Marsal Europe
Matt Webster, Global Head of Real Estate Finance, HSBC London
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Networking Break in Exhibit Hall
10:20 – 10:45am
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Bank Lending – Regulation, Legacy, New Lending
10:45 – 11:35am
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Moderator:
Mike Kelly, Managing Director, JPM Investment Management
Panelists:
Vince Locher, Executive Director, Huntington National Bank
Diana Reid, Executive Vice President, PNC Real Estate
Greg Reimers, Market Manager, JPMorgan Chase Real Estate Banking
Richard Williams, Managing Director, Bank of America Merrill Lynch
Topics:
- Navigating the competitive landscape of bank sheet lending: how has it changed over the last five years?
- The new competitors: how do lenders differentiate themselves from others? How do you handle servicing, in-house, third party? Do you think this influences borrower’s decisions on picking a lender?
- Are bridge loans or construction loans being provided? Is there any concern on overbuilding?
- Underwriting standards: what’s changed from the peak, what are borrowers pushing back on? How is multi-family lending changing?
- With CMBS volume down so far from the peak, how are banks looking to adjust products to provide borrowers who traditionally looked at CMBS as a main source?
- What are banks’ current views on mezzanine lending?
- Bank Regulations: what is your view on risk retention? How have the new regulations influenced businesses already, what impact is coming? Is it an even playing field?
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CMBS Distribution & Investing
10:45 – 11:35am
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Moderator:
Paul Vanderslice, Managing Director, Citigroup Global Markets
Panelists:
Steve Kraljic, Director, Wells Fargo Securities, LLC
Samir Lakhani, Director, BlackRock
Don MacKinnon, SVP Head of High Yield Portfolio Management, Cole Real Estate Investments
Rene Theriault, Vice President, Goldman Sachs
Topics:
Product
- Loan Quality
- Overall Metrics
- Investor Issues
Pricing
- Relative Value of AAA
- Secondary Market Liquidity
- Short AAA versus Long
- Relative Value of AA through BBB
CMBS Syndicate Process
-Transparency- Do all bonds clear?
- Road shows- Are they useful or not?
- Changes in New issue Process from CMBS 1.0/2.0
- Loan Sellers
- Private Bonds Pre-selling
The CMBS Sector
- Overall Perception of CMBS
- How Relevant is CMBS to Investor Performance Benchmarks?
- CMBS 1.0 versus CMBS 2.0/3.0
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Networking Break in Exhibit Hall
11:35am – 12:15pm
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KEYNOTE SPEAKER GEORGE WILL
12:15 – 1:45pm
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Sponsored by: Wells Fargo, Salons I, II, III, IV |
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Dessert Buffet in Exhibit Hall
1:45 – 3pm
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Sponsored by: Polsinelli Shughart PC, Salons D,E
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Housing Markets – Has the Recovery Started?
1:45 – 2:30pm
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Speaker:
Lawrence Yun, Chief Economist, National Association of Realtors
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Disclosure Issues: Servicers & Investors
2:30 – 3:20pm
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Moderator:
Jan Sternin, Senior Vice President and Managing Director, Berkadia Commercial Mortgage
Panelists:
Bob Behal, Principal, Vanguard Group
Stacey Berger, Executive Vice President, PNC Real Estate/Midland Loan Services
Brian Hanson, Managing Director – Operations, CWCapital Asset Management LLC
Adam Hayden, Vice President, New York Life Investment Management
Tom Nealon, General Counsel, LNR Partners, LLC
Stephanie Petosa, Managing Director, Fitch Ratings
Topics:
- Framing the Ongoing Investor Legacy Issues/ Best Practices Document
- Looking Forward CMBS 2.0/Changes and Enhancements to the 1.0 Model
- Transparency Working Group/Issues being Addressed
- Debunking the Servicer Myths/ What are the Current Trends?
- What Keeps You Up at Night
- Tell Us Something We Don’t Know
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Where’s the MEAF?
2:30 – 3:20pm
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Moderator:
Kurt Wassenar, VP Real Estate Finance, ING Investment Management
Panelists:
John Bruins, VP & Senior Actuary, American Council of Life Insurers
Kevin Cavanagh, Managing Director, MetLife
Don Dibble, Senior Vice President, Lincoln National Investment Management Corp.
Todd Everett, Managing Director, Principal Real Estate
Topics:
- What is the general history?
- Where do we stand today?
- What are the hurdles remaining and the perceptions on timing?
- What is the general direction of the proposed solution?
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Networking Break in Exhibit Hall
3:20 – 3:45pm
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Borrower Side - Whose Capital Do They Prefer?
3:45 – 4:50pm
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Moderator:
Mark McCarthy, Managing Director, Shorenstein Properties LLC
Panelists:
Steve Anderson, Managing Director, LoanCore Capital, LLC
Rick Coppola, Managing Director, TIAA
Leslie Ludwig, Partner, JBG
Gayle Starr, Senior Vice President, Prologis
Joe Tufariello, Managing Director, Wells Fargo
Topics:
- What are the trends seen over the last three year?
- Why are certain lenders chosen?
- Who are the different borrowers?
- What does a borrower get?
- What kind of requirements are there for pre-leasing of construction loans/what is the pricing?
- What does the market think about prepayment flexibility and pricing?
- What does the market think of interest-only?
- Mezzanine Market: How is this received by Life Companies and CMBS?
- How is the bank market competing with non-bank?
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Stress Testing the Rating Agencies: Any Lessons Learned?
3:45 – 4:35pm
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Moderator:
Brian Olasov, Managing Director, McKenna Long & Aldridge
Panelists:
Ken Cheng, Managing Director- CMBS, Morningstar Credit Ratings
Kim Diamond, Senior Managing Director, Co-Head Structured Finance, Kroll Bond Ratings
Peter Eastham, Managing Director, Standard & Poor's Ratings Services
Tad Philipp, Director - CRE Research, Moody's Investor Service
Huxley Somerville, Managing Director, Fitch Ratings
Erin Stafford, Managing Director, DBRS, Inc.
Topics:
- Have the rating agencies reformed? If so, how?
- What do new entrants bring to the market that was previously missing?
- What do investors need to see to re-establish trust?
- Looking at new deals, how does underwriting compare to legacy deals? -- What are the trends in 2.0 quality?
- What’s the impact of proposed regs on rating agencies?
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Networking Reception
5 – 7pm
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Sponsored by: Credit Suisse, Garden Terrace (Lobby Level) |
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Wednesday, June 13, 2012
Continental Networking Breakfast
8:15 – 9am
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Co-Sponsored by: CIBC World Markets Corp. and Standard & Poor’s, Salons D, E
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Assessing the U.S. Bank System
9 – 10am
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The Comptroller's Views on Financial Reform: Remarks by Thomas J. Curry, Comptroller of the Currency, Salons II, III |
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Networking Break
10 – 10:15am
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Buying US & European Bank Debt
10:15 – 11:05am
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Moderator:
Pat Jackson, Chief Executive Officer, Sabal Financial Group
Panelists:
Faisal Ashraf, Head of Commercial Real Estate (Asset Finance), Credit Suisse
Dave Dorros, Vice Chairman, CBRE
Ken Frank, Managing Director, CWCapital Asset Management LLC
Donald Sheets, Senior Principal, Square Mile Capital Management LLC
Chris Tokarski, Chief Credit Officer, Starwood Capital Group
Topics:
- What are the predictions for US banking environment in the next 2-3 years?
- What impact will a recession have on your businesses?
- Do you see a restoration of new debt origination in the U.S. banking sector beyond the top 5 banks in the next 18 months?
- How would you compare and contrast Europe’s distressed debt opportunity with that of the U.S.?
- Would you consider investing in distressed debt in Europe more or less risky than investing in distressed debt in the U.S. today?
- We are 3 years into the cycle in the U.S., with significant deal flow from U.S. banks. Do you think the European cycle will be similar in length and have similar results?
- What is your company’s appetite for distress debt in Europe?
- With European bank balance sheets under pressure, do you see a major shift in new debt from European originations to favor securitizations?
- Which is the more appealing story – pursuing European or U.S. debt opportunities? Either distressed or new debt?
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Navigating the Distressed Debt Marketplace
10:15 – 11:05am
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Moderator:
Kevin Donahue, Senior Vice President, PNC RE/Midland Services
Panelists:
Keith Gollenberg, Managing Director, Oaktree Capital
Bob Kline, CEO & Principal, RW Kline
Michael Lesser, Managing Director, Eastdil Secured
Matt Salem, Managing Director, Rialto Capital Management
Peter Sotoloff, Managing Director, The Blackstone Group
Topics:
- What’s been seen recently in the marketplace and how it is different than what was expected?
- What yields are being targeted?
- How the market has evolved related to pricing?
- Where are the assets coming from?
- Where is there distress, and is there anything is being done about it?
- Myths vs. reality: Is capital being deployed?
- What are the emerging trends at the macro level?
- Where is the market going from here?
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Networking Break
11:05 – 11:15am
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CREFC Legislative and Regulatory Overview
11:15am – 12pm
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Speakers:
Michael Flood, Vice President, Legislative & Regulatory Policy, CREFC
Marty Schuh, Assistant Vice President, Legislative and Regulatory Policy, CREFC
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Board of Governors Meeting
12 – 1:30pm
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Thanks to our June Conference Sponsors
Platinum Sponsors
Silver Sponsors
Bronze Sponsors
General Sponsors
George Will (Keynote Speaker)
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Pulitzer Prize-winning columnist George F. Will is the country’s most widely read political columnist, as well as its foremost conservative voice. His popular twice-weekly column for The Washington Post syndicate reaches nearly 500 newspapers throughout the United States and Europe and he appears regularly on ABC’s This Week. Perhaps there’s no political acumen more finely honed than Will’s. And perhaps no one has more or better insights into the issues and political realities of today. As one of the most respected and sought after political commentators on the national scene, Will provides you with an informed and expert view on the issues. He is a prolific author with books ranging from The Woven Figure: Conservatism and America’s Fabric to Bunts to his latest, One Man's America. In 1990, Will published Men At Work: The Craft of Baseball, which topped The New York Times best-seller list for two months and was most recently reissued on April 13, 2010 as a 20th Anniversary special edition with a new introduction (paperback).
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Thomas J. Curry
Thomas J. Curry was sworn in as the 30th Comptroller of the Currency on April 9, 2012.
The Comptroller of the Currency is the administrator of national banks and chief officer of the Office of the Comptroller of the Currency (OCC). The OCC supervises more than 2,000 national banks and federal savings associations and about 50 federal branches and agencies of foreign banks in the United States. These institutions comprise nearly two-thirds of the assets of the commercial banking system. The Comptroller also is a director of the Federal Deposit Insurance Corporation (FDIC) and NeighborWorks® America.
Prior to becoming Comptroller of the Currency, Mr. Curry served as a Director of the FDIC since January 2004, and as the Chairman of the NeighborWorks® America Board of Directors.
Prior to joining the FDIC’s Board of Directors, Mr. Curry served five Massachusetts Governors as the Commonwealth's Commissioner of Banks from 1990 to 1991 and from 1995 to 2003. He served as Acting Commissioner from February 1994 to June 1995. He previously served as First Deputy Commissioner and Assistant General Counsel within the Massachusetts Division of Banks. He entered state government in 1982 as an attorney with the Massachusetts’ Secretary of State’s Office.
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Mr. Curry served as the Chairman of the Conference of State Bank Supervisors from 2000 to 2001, and served two terms on the State Liaison Committee of the Federal Financial Institutions Examination Council, including a term as Committee chairman.
He is a graduate of Manhattan College (summa cum laude), where he was elected to Phi Beta Kappa. He received his law degree from the New England School of Law.
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Lawrence Yun
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Chief Economist and Senior Vice President of Research, National Association of Realtors®
Lawrence Yun is Chief Economist and Senior Vice President of Research at the National Association of Realtors®. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million Realtor® members. Dr. Yun creates NAR’s forecasts and participates in many economic forecasting panels, including Blue Chip and the Harvard University Industrial Economist Council. He appears regularly on financial news outlets, is a frequent speaker at real estate conferences throughout the United States, and has testified before Congress. USA Today in 2008 listed him among the top 10 economic forecasters in the country, and he has been named among the 100 Most Influential Real Estate Leaders by INMAN News.
Dr. Yun received his undergraduate degree from Purdue University and earned his Ph.D. from the University of Maryland at College Park.
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The Attendee List is available to registered attendees of the 2012 June Annual Conference. Registered attendees may click the below link to access the attendee list.
Attendee List