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Forum Spotlight: Portfolio Lenders 

February 27, 2023 

Together, Stefanie, Chris, Michael, Jonathan, Scott and Lissette form the Leadership Working Group for CREFC’s Portfolio Lenders Forum. Importantly, this group sets the agendas and priorities for the Forum, as well as represents their constituencies on CREFC’s Policy Committee.

Key Portfolio Lender Focus Areas

• Valuation and Rates: Declines in valuation, higher interest rates and more disciplined underwriting (moderate rent growth and increased expenses). Higher rates and tighter coverage have led to more CM2 business across the board
• Lending Pipeline and Appetite: More capital available than second half of last year but volume still down. Transactions are limited due to the delta between sellers and buyers. Less interest rate volatility should help increase transaction volume. 
• Asset Management: Maturing transitional/bridge loans are facing refinance risk (increased cap costs, tight DY and DSCR metrics that don’t allow for a perm takeout). Office will have a hard time with little liquidity in the market and multifamily will see some hiccups as well as syndicated borrowers aren’t able to write the checks required for the pay down or extension costs.

What they're saying: Conversations at CREFC’s January conference focused on the availability and appetite of various debt capital sources (such as CMBS, GSE’s, debt funds, life companies and banks), and the impact of higher rates on risk ratings of loans in the portfolio and overall portfolio risk.

Key Policy Issues:

• Regulatory framework for ESG and climate change compliance and reporting
• Bank Capital Review
• SEC Climate Reporting
• Beneficial Ownership Reporting
• Multifamily reporting requirements under Home Mortgage Disclosure Act (HMDA)

What's next: Forum leaders are seeking nominations for the next Chair Elect to join their leadership slate and look forward to presenting CREFC members with an update on their forum at the Annual June Conference in New York City. 

To join the Portfolio Lenders Forum, please register here.  For any forum related questions, please contact Kathleen Olin at kolin@crefc.org. 

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CREFC Introduces New Forums

December 12, 2022. 

This week CREFC announced changes to its industry sector forums:

• A new High Yield Investments/Alternative Lending Forum will serve debt funds and others that comprise private lenders and investors in commercial real estate debt (whole loans, mezzanine loans, preferred equity, and sub-performing/non-performing loans).
• An expanded Servicers Forum will more fully incorporate CREFC members focused on special assets and special situations.

The changes reformulate the existing High Yield and Distressed Reality Assets (HYDRA) Forum and reflect the evolution of this sector of the CRE finance market. More information on the new forums is below.

CREFC Member Action Required: Current CREFC members of both the HYDRA and Servicers Forums will receive an email request to make new forum selections based on their role in the industry and the descriptions of the forums as presented above.

• Forum sessions at the January Conference will incorporate the new Alternative Lenders and High Yield Investors Forum, as well as the newly expanded Servicers Forum.
• To sign up for a forum, please click here. For any forum related questions, please reach out to either Lisa Pendergast or Kathleen Olin.

Alternative Lenders and High Yield Investors Forum

The Alternative Lenders and High Yield Investors Forum will focus on the needs of this growing and important source of market liquidity. Alternative lenders now represent 15% to 20% of annual CRE lending activity.

Membership in this forum will include Alternative lenders and High yield investors in the CRE debt and equity space:*

• Lenders and investors include debt funds, public/private mortgage REITs, money managers, separately managed accounts (SMAs), and other public or private entities.
• Investments include bridge and mezzanine loans, preferred equity, and special/distressed situation opportunities.
• Third-party service providers and business partners who work closely with such lenders and investors.

Importantly, this forum will be instrumental in the development and ongoing maintenance of the soon to be launched CREFC/NCREIF Open-End Debt Fund Index, with the goal of increasing transparency and liquidity in this important sector of the market.

The forum will also:

• Afford this CREFC member segment a clear, formal voice in CREFC
• Provide members with a stronger voice with regulators and legislators on Capitol Hill.

Updated Servicers Forum

The HYDRA transformation will shift the Distressed Realty Assets (DRA) portion of HYDRA to the Servicers Forum. CREFC is realigning the Servicers Forum to include two main focus areas:

• Servicing Administration
• Special Situations/Special Assets

The newly cast Servicers Forum will represent market participants with separate leadership teams in the servicing of performing asset and non-performing/distressed assets, and include primary servicers and the GSEs.

The combined and expanded Forum will create a collaborative environment to focus on all servicing and trust administration issues within a single forum, while recognizing the diverse issues associated with servicing performing and non-performing loans.

Note that both the current leadership within the Servicers Forum and the Distressed Realty Assets sub-forum of HYDRA will remain in place.

Go deeper: Over the years, content for the existing HYDRA Forum has become divergent into near separate discussions that relate to either alternative lending/investing or distressed asset management and special servicing. This divergence has made it challenging to optimally serve the varying needs of existing HYDRA members. The revised forums aim to better align these conversations.

 * Does not include (is not intended to replace) lenders/investors that are served by the Investment-Grade Bondholders, B-Piece Investors, Portfolio Lenders-Bank, Portfolio Lenders-Insurance Company, or Issuer forums

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HYDRA Forum members will be asked to realign themselves with new forum structure.

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Portfolio Lenders Forum Spotlight

October 17, 2022. 

Together, Stefanie, Chris, Michael, Jonathan, Scott and Lissette form the “Leadership Working Group” for CREFC’s Portfolio Lenders Forum. Importantly, this group sets the agendas and priorities for the Forum, as well as represents their constituencies on CREFC’s Policy Committee.

Key Portfolio Lender Focus Areas

1. Regulatory considerations and muted capital markets activity pressuring bank balance sheets, along with CRE allocation or other loan book size constraints.
2. More disciplined underwriting (increasing expenses and cap rates) coupled with higher interest rates (heightened emphasis on rate sensitivity analysis) and declines in valuations across the board.
3. Escrows (taxes and insurance for example) that were once waived due to low leverage are back as a result of lower valuations and DSCRs.
4. Credit focus shift towards the office sector, with increasing delineation between the ‘haves’ and ‘have nots’.
5. ESG-linked financings are increasingly a focus for both borrowers and lenders.

Looking ahead:  Due to the uncertainty in the capital markets, asset managers are looking ahead to avoid maturity defaults on maturing bridge debt. From a portfolio management perspective, lenders are examining office concentrations as well as transactions that no longer hit DSCR targets in the current rate environment. Refinancing comes at a high cost with a principal paydown, fees and high cap costs.  Those borrowers looking to sale as an exit no longer have certainty of execution. 

What’s Next? Forum leaders are planning a virtual forum-wide legislative and regulatory policy update and will soon be formulating the agenda for the forum session at CREFC’s January conference. 

To join the Portfolio Lenders Forum, please register here.  For any forum related questions, please contact Kathleen Olin at kolin@crefc.org. 

Contact 

Together, Stefanie, Chris, Michael, Jonathan, Scott and Lissette form the “Leadership Working Group” for CREFC’s Portfolio Lenders Forum. Importantly, this group sets the agendas and priorities for the Forum, as well as represents their constituencies on CREFC’s Policy Committee.

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CREFC Portfolio Lenders Forum

March 21, 2022

Meet our leadership team:

Insurance Company Lenders Sub-Forum

CHAIR	CHAIR-ELECT	PAST-CHAIR
Michael Cale Co-Head Debt Investments Allianz	Stefanie Stewart SVP – Real Estate Finance Voya Investment Management	Eric Becher Managing Director /Portfolio Manager - Debt New York Life

Bank Lenders Sub-Forum

CHAIR	CHAIR-ELECT	PAST-CHAIR
Lissette Rivera-Pauley Credit Products Team Manager - Income Property Finance, Senior Vice President Regions Bank	Jonathan Salzinger Director,Real Estate Corporate Banking Bank of America	Sylvia O’Neill Associate General Counsel and SVP Bank of America

Together, Michael, Stefanie, Eric, Lissette, Jonathan and Sylvia form the “Leadership Working Group” for CREFC’s Portfolio Lenders Forum. Importantly this group sets the agendas and priorities for the Forum, as well as represents their constituencies on CREFC’s Policy Committee.

Portfolio Lender Forum conversations at CREFC’s January conference covered an array of topics from business operations to market focus. Internal to many lenders’ businesses, they are discussing how best to hire and train personnel to move up the ladder, how best to manage office space and potential hybrid flexibility and when people are in the office, and how to make the most of it to collaborate.

Externally, lenders are seeing much competition, especially with private equity firms acquiring insurance firms. Lenders are focused on maintaining strong credit quality and developing heightened ESG lending and reporting.

Additionally, these recent policy issues are of interest for Portfolio Lenders:

• ESG
• Home Mortgage Disclosure Act (HMDA) reporting
• CFPB’s 1071 Small Business Reporting
• FinCEN’s Anti-Money Laundering in Real Estate ANPR
• Community Reinvestment Act (CRA) Revisions

Seeking Forum Leaders for the Upcoming Term. Forum leaders are currently considering nominations for the next incoming chair to join their leadership slate and formulating the agenda for the forum session at CREFC's Annual Conference in June.

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