2015 MBA Convention Report

2015 Mortgage Bankers Association Commercial Real Estate Finance Convention (MBA CREF) was the highest attended of recent years.  We at GSP met with over 100 capital providers including formal presentations in our meeting room, visits to lender gatherings, individual meetings, etc….  The upshot?  Lots of capital available throughout the stack.  Trends include (1) Capital providers offering multiple platforms (such as bridge, mezzanine, perm); (2) Lenders are bracing for the massive wave of maturities in 2015-2017.  As those loans were originated at peak valuations and often included aggressive underwriting, full term interest only, etc, multiple mezzanine lenders are preparing to help borrowers hit the necessary proceeds; (3) CLOs are back (Collateralized Loan Obligations).  Unlike the prior CDOs which included non-real estate debt (such as auto loans, low rated tranches of other pools), the CLOs are all commercial real estate loans.  Secondary market buyers are reacting favorably to the “transparency”,  and therefore providing bridge lenders with more capital for non-recourse floating rate loans, (4) “Dequity” ie; high leverage debt that acts as “cheap equity”; (5) CMBS:  Several new entrants (with large balance sheets) into an already crowded field, spurring everyone to compete on terms; (6) Foreign banks getting aggressive again and domestic lenders lending to foreign nationals…..  When considering loan requests, larger continues to garner more attention as more capital and capital providers enter the market in anticipation of ballooning debt …. stay tuned…  David R. Pascale, Jr.