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CRE Finance World, Winter 2014

Forum Spotlight: High Yield and Distressed Realty Assets Forum (HYDRA) t the June 2013 CREFC Conference, the Forum previously known as High Yield Debt and Investment Forum was renamed “High Yield and Distressed Realty Assets Forum” or HYDRA ( a nod to the “dark side” of Greek mythology that seemed appropriate). Bill O’Connor of Thompson & Knight and the outgoing Chair then announced that the Forum would be split into two sub-Forums: High Yield – Chair – Greta Guggenheim, Ladder Capital Chair Elect – Nik Chillar, Union Bank Distressed Realty Assets – Chair – Kevin Donahue, C-III Capital Partners Chair Elect – John D’Amico, Trimont The Forum met during the June conference and had a very spirited and interactive discussion amongst its membership, led by Bill O’Connor. Topics included: performance of modified loans, special servicing resolutions continuing to exceed new asset transfers, aggressiveness of new issue underwriting, where are the distressed debt buying opportunities (supply and pricing), FDIC loss sharing, trends in the mezzanine and B note market, the insatiable pursuit of yield and other related topics. The most hotly debated topics centered on the belief that the next bubble may already be in its formative stages as well as the “elephant in the room,” which is rising interest rates. In the month prior to the conference, the benchmark 10-year treasury rate had increased by 56 basis points and since that time has climbed another 78 basis points to almost 3% or an 80% increase from the low water mark achieved in May 2013. The rising interest rate environment will have a dramatic impact on legacy CMBS assets approaching maturity, new issuance, asset valuation and cap rates. HYDRA will continue in 2013/2014 to focus on relevant topics for our constituency and will reach out to other CREFC Forums to interact on topics of mutual interest and concern. HYDRA seeks to become more relevant to bridge and mezzanine lenders and investors and is offering programs that target this constituency. We are also working closely with the broader CREFC organization that is focusing on the new risk retention rules being debated, issues around greater transparency and disclosure, regulatory constraints (FASB, SEC, CFPB, etc.), PSA changes, underwriting standards and others areas of mutual concern. HYDRA is also committed to providing venues to our members that will facilitate CRE Finance World Winter 2014 84 discussion around topics of interest and do so in a more geographically diverse way so that more of our constituent base is served. Some of the past and upcoming events include: • CREFC HYDRA 2nd Annual Educational Summit — September 19, 2013, Dallas TX • After Work Seminar — October 8, 2013 in Chicago hosted by Foley & Lardner • Mezzanine Roundtable: On October 31st of this year, the Forum initiated its first Mezzanine Roundtable. This was hosted by Blackstone (which provided its very impressive board room for the location), CCRE and CREXUS. The event was moderated by Bruce Cohen of Ares Management LLC, who did an outstanding job of asking relevant, thought-provoking questions. The attendees were high level executives representing 25 firms. Bruce kept the conversation lively and interactive. Following the roundtable, the discussion continued over cocktails in Blackstone’s reception area and a few diehards persevered at a local beverage establishment. We are planning the second roundtable for April of 2014, also in NYC. • HYDRA Reception in Conjunction with the Trigild Lenders Conference in San Diego • Forum Meeting and Panel discussion at the CREFC January Conference at 11:00 a.m. on Monday, January 13th. • Roundtable discussion in San Francisco in early 2014 with date TBD • HYDRA Summit East — March 12–13, 2014 at the New York Athletic Club in NYC • HYDRA Summit West — May 13–14, 2014 at the Fairmont Miramar in Santa Monica, Calif. The leadership of HYDRA is committed to presenting interesting venues, topics and events in order to broaden the reach of the Forum and provide a platform to share information and foster enhanced understanding and cooperation among our members. We will reach out to you as more events are announced as well as seek your input and guidance on topics of concern or relevance. If anyone wishes to participate, propose events or suggest topics feel free to contact any of the respective Chairs or Chair Elects of the two sub-Forums. As you know HYDRA was a multi-headed mythological beast so more voices are always needed. A Greta Guggenheim Chief Investment Officer Ladder Capital Finance LLC


CRE Finance World, Winter 2014
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