Letter from the Editor

CRE Finance World, Winter 2013

Editor’s Page Letter from the Editor Brian P. Lancaster Co-Head of Structured Transactions, Analytics, Risk and Strategy RBS Global Banking & Markets W World. This issue itself, full color, bursting with great example of a new program that is already successfully doing just that,Shugrue’s CMBS — Party Like Its 2007. Douglas Holtz-Eakin laysout his requirements for responsible and sustainable GSE reform,one of which is public and private sector risk sharing, which iscomplemented by our article on Freddie Mac’s K program, a greatCRE Financeelcome to the Winter 2013 edition ofarticles, culled from many more and now on a solidfinancial footing is symbolic of the industry is itself.Yet as I write, House Speaker, John Boehner is in the background on the television rebutting the President’s proposal growing to a size that nearly rivals the non-agency CMBS market. which was a rebuttal of John Boehner’s earlier proposal and so forth and so on. While the “fiscal cliff theater” is disconcerting If there is any other theme that seemed to dominate the many to all of us, I do take some comfort in the fact that the challenge articles submitted for this issue, it was one of “not so fast”. we now face in commercial real estate finance is Washington not Optimism in the industry is palpable, and for the most part justified, “messing up” a market recovery which is underway either through thanks in part to Mr. Bernanke and a generous Federal Reserve, regulatory overreach or fiscal irresponsibility. It was not so long ago but our authors seem to be telling more subdued and nuanced that markets were the problem and government, the ham handed tales. This theme comes through in the Roundtable discussion solution, certainly a greater challenge. where Sam Chandan discusses the improvement in commercial real estate but believes cap rate compression, more than NOI The task before us now, if we have learned anything from the past, growth, is the driver. Aaron Bryson’s “Legacy CMBS Credit Outlook is to not only keep real estate finance profitable for investors, lenders for 2013: Don’t Get Caught Swimming Naked” strikes a similar and borrowers, but to make it responsible and sustainable as well. cautionary note as do Eduardo Martinez in, “A Modest Outlook for To that end we start this issue, with two articles, our Commercial Commercial Real Estate” and Jack Mullen’s “Construction Debt Real Estate Finance Roundtable Outlook 2013, moderated by Casts a Long Shadow over Banks’ CRE Portfolios.” myself, and Guideposts for Federal Housing Policy by Douglas Holtz-Eakin, the former Director of the Congressional Budget Perhaps it is the success that commercial real estate finance has Office and Former Chief Economic Policy Advisor to U.S. Senator enjoyed over the last year and that many expect in 2013 that allows John McCain’s 2008 presidential campaign. The Outlook, while us the luxury of cautionary tales and criticism. But if we are to not optimistically discussing the future of CMBS, of balance sheet repeat the mistakes of the past, we would do well to heed them. lending, and the revival of mezzanine securitizations also highlights ongoing credit quality erosion — a theme picked up again in Ed Brian P. Lancaster A publication of Winter issue 2013 sponsored by CRE Finance World Winter 2013 3


CRE Finance World, Winter 2013
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