February 23, 2010

MBA Conference Highlights via CBRE Debt & Equity Team

Here are some highlights/insights from CB's Debt & Equity team on the Mortgage Bankers Association Conference last week in Las Vegas:
  • The Debt Capital Markets are back, Las Vegas is not
  • Liquidity has returned with Life Cos increasing allocations and Securitized lenders back in market; material increase in effective capacity
  • Lenders have overcome their fear of commercial real estate, still careful but working to compete (greed overcomes fear once again)
  • Obama is a friend to the industry, annuity $ are flooding lenders liquidity accounts
  • 60-65% Leverage is the new 50-55% LTV
  • Up to 75% LTV is possible on at least some assets in select markets; as well as recapitalization, mezzanine, equity, hope notes, basis plays, etc
  • 6% Loan Coupon is the new 8%
  • Positive leverage is increasingly available, across the asset range
  • Competition for multi-family loans heats up as Life Co pricing narrows gap with agency terms
  • The valuation cycle is at or past bottom, at least for better quality assets; but there is a divide between high & low quality
  • The residential market bottomed last year and is now favorably priced based on relationship to median income
  • The cycle has moved past Fear, to Capital and then Fundamentals, should have a longer than typical run (10 years or more)
  • Banks are beginning to break the extension pattern, forcing borrowers to mark assets with sale or refinance on today's reality
  • This remains an orderly process, with abundant acquisition capital succeeding accommodating lenders as a limit on price weakness
  • The tone and optimism at this year's event could not possibly have improved more than it did compared to last year
  • Commercial real estate is a solid asset class and there is broad consensus that now is an optimum time to invest debt or equity capital

For more information, contact Jason Brown (248.351.2089) or Tony Roberts (248.936.6838) with CBRE's Debt & Equity team.


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