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CRE Finance World Summer 2015


A Lender Roundtable: Real Talk from Real Lenders on Today’s Competitive Commercial and Multifamily Lending Environments


Lisa Pendergast

Managing Director

Jefferies LLC

Stephanie Petosa

Managing Director

Fitch Ratings


Larry Brown


Starwood Mortgage Capital

Brian A. Furlong

Managing Director

New York Life Real Estate Investors

Spencer Kagan

Managing Director

Barclays PLC

Clay M. Sublett

Senior Vice President

Key Bank Real Estate Capital

Stephanie Petosa. Thanks to everyone for participating on our

2015 Lender Roundtable. We are fortunate to have a broad

spectrum of seasoned CRE lenders with us today: Brian Furlong

represents life company lenders, Clay Sublett bank portfolio

lenders, Spencer Kagan bank CMBS lenders, and Larry Brown

non-bank CMBS lenders. This group provides us with a 360-

degree view of today’s lending environment, including its positive,

negatives, challenges and opportunities. So let’s get started.


Never Interrupt Your Enemy When He Is Making

a Mistake

(Napoleon Bonaparte 1769-1821)

Lisa Pendergast. Few would argue that competition hasn’t

increased for all capital providers, be it portfolio lenders, the

GSEs, or CMBS lenders. Despite the increasingly competitive

lending landscape, demand for capital should increase in 2015

and over the next two years given the anticipated high volume

of maturing loans and historically high levels of commercial-

property transactions. How is competition affecting the way

you think about the business and what you anticipate over the

next couple of years?

Brian Furlong.

I don’t think real estate or structured finance is

leading the way in terms of a boom. It’s not overheated compared

to how it was in 2007 when real estate and structured finance in

particular did help lead the boom. When you think about what went

wrong, a lot of it was excess in structured finance and I don’t think

that’s true today. The premise that we’re overheated is probably not

true in my opinion.

Clay Sublett.

I agree with Brian directionally. I don’t think the market

is necessarily overheated, but it is dangerously close to getting

there. The rebound in the overall economy and the return of the

banking sector as well as other lenders explain the heightened

competition and the erosion in loan structure in some cases. The

broader level of competition is a good thing as opposed to when

one dominant execution prevails. It’s not healthy when one particular

sector dominates, no matter if it’s agency, bank, or CMBS. Today,

everybody is picking their spots and deciding where they want to

lean in. Interestingly, there is an overlap in terms of traditional lenders,

and it’s largely driven by interest rates. Traditional floating-rate

lenders are choosing to lend fixed rate in some cases because

they think it is a better risk or a better bet. Some traditional fixed-

rate lenders are choosing to go with floating rate.

Larry Brown.

It’s interesting when you look at institutional behavior

across lender types… a lot of lessons have been learned. One

reason commercial banks are crossing over from floating to fixed

rate is because they’re making fewer construction loans, fewer

land development loans. They are pursuing the safer products.