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CRE Finance World, Summer 2014

drive the recovery through the controlling holder seat with closer to equity-like risks and returns. Additionally, CMBS typically pays a current monthly coupon that assists in eliminating the “J-Curve” commonly associated with equity real estate investing. Lastly, unlike real estate equity investing, which has limited liquidity, CMBS bonds carry significant liquidity with three-day settlement. Today’s successful CMBS investor will monitor and track all CMBS sectors, including: • Legacy and New Issue; • Floating and Fixed-Rate; • Conduit and Single Asset/Borrower; • Performing and Non-Performing; • Cash and Synthetic; and • Investment Grade to B-piece. 3217_harborCMA_apr2013.qxd:Layout 1 4/22/13 12:11 PM Page 1 CRE Finance World Summer 2014 52 By closely following these various sectors, capital can be effectively allocated to where the opportunity is most attractive or out of line with historical norms for fundamental or technical reasons. While impossible to accurately forecast which subsectors within CMBS will provide the greatest absolute or relative returns at a particular moment, the CMBS space will provide outsized returns for dedicated investors who are able to invest opportunistically across the capital structure and across various CMBS sectors nimbly for the next four years. In addition to comparatively outsized returns, CMBS rewards investors with its liquidity and current income. Edward L. Shugrue III is the CEO of Talmage, LLC (“Talmage”). Talmage is an independently owned and operated commercial real estate investor, Special Servicer and advisor created in 2003. Since its formation, Talmage has made in excess of $10 billion of real estate debt investments and acted as the Special Servicer or advisor on over $40 billion of successful CMBS resolutions. Talmage is headquartered in New York City. www.talmagellc.com The Case for Commercial Real Estate Debt Now “Loss severities could be double historical norms for the 2006–7 vintages with very concentrated losses.” I N S U R A N C E R E V I E W & A N A L Y S I S Trusted by the world’s leading lenders I N S U R A N C E C O N S U L T A N T S WITH OFFICES IN NEW YORK AND MIAMI Telephone: (212)336-0816 Lfields@harbor-insurance.com Harbor Group is the premier insurance consulting firm to investment banks, capital market lenders, and commercial banks. For over 20 years, from comprehensive insurance review to advisory services, our seasoned expertise provides prudent, time-sensitive counsel.


CRE Finance World, Summer 2014
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