A Contrarian View on the Single-Family Rental Market

More than two years after the first single-family rental securitization, the single-family rental market continues to evolve and grow. The rise of single-family rentals reflects both a demographic shift among the American population and a reactionary change in consumer habits resulting from the financial crises. According to U.S. Census Bureau, the percentage of Americans that own homes has decreased from almost 70% in 2004, to 63.6% in the first quarter of 2016, the lowest percentage in over 25 years. Over 13% of Americans rent single-family homes – a 4% increase from before the crises, accounting for approximately 36% of all rental homes. The decline in homeownership and the increase in the percentage of Americans that rent single-family homes reflects several key demographic and economic changes: Continue Reading

Bail-In, or Just Bailing?

You know, there’s never a dull moment when one reports on the regulatory states’ endless and so often fruitless and wrong-headed tinkering with the global economy. So now… let’s talk bail-in. The bail-in regime, which was adopted by all European Union countries (other than Poland) and implemented on January 1, 2016 (European Economic Area (EEA) members Norway, Iceland and Lichtenstein are required to adopt the regime by December 31, 2016), permits European financial regulators to “bail-in” a failing institution by cancelling, writing-down, or converting into equity certain of the institution’s unsecured liabilities. Affected institutions must include a contractual recognition clause in its non-European-law governed contracts, so that all counterparties acknowledge that the institution’s liabilities are potentially subject to bail-in and agree to be bound by them.

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Cuba and the Booming Commercial Real Estate Industry to Come

On March 20, 2016, President Obama became the first United States president in almost 90 years to visit the island of Cuba, located a mere 90 miles from the coast of Florida—signaling not only a renewed diplomatic relationship between the United States and the communist country, but also, the dawning of a new commercial age which will undoubtedly transform Cuba and its real estate industry. Continue Reading

Brushing up on Brexit – Do I Care?

The referendum on whether the UK leaves the European Community is increasingly a Today issue.  With a vote on June 23 the reality of a UK exit is getting harder to ignore.

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Three Things You Should Know about Negative Interest Rates

Financial downtrend chart and red pencil. Selective focus

The Federal Reserve announced last Wednesday that it is leaving the federal funds rate where it is, for now.  While the United States is pondering interest rate hikes, other parts of the world are plunging further into negative territory.  Last Thursday, in an attempt to bolster Europe’s weakening growth and spur inflation, the European Central Bank (the “ECB”) lowered its deposit rate by another 0.1%, pushing its deposit rate down to -0.4%.

With other central banks lowering rates into the negative, will the U.S. follow? Why is this happening? What could go wrong? How will this affect our banks?  Click through for three things you should know about negative interest rates.

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Observations from ABS Vegas: The CLO Perspective

Over the past few years, the ABS Vegas conference has been the place for industry participants to congratulate each other on a job well done (most recently on a record-setting 2015 for CLO primary issuance), meet-and-greet with clients and generally unwind, making sure to sprinkle a few “important” meetings across the three-day span.  However, following a January and February where CLO primary issuance was down well over 50% year-over-year with little sign of an upturn before the conference, most of us went into ABS Vegas 2016 with uneasy feelings. Continue Reading

Flash: Congress Fixes the CMBS Risk Retention Problem (Just Kidding)

Last week, the House Committee on Financial Services reported out the Preserving Access to CRE Capital Act of 2016 (the “bill”) in a remarkably bipartisan sort of way (paving the way for: “Well, yes, I did vote for it, but then I voted against it.”).  The bill, which was drafted and backed by CREFC, would exempt certain single asset/single borrower securitizations from the risk retention requirements, would allow the B-piece buyer to acquire the risk retention piece in a senior/subordinate capital structure and loosen the criteria for a qualified commercial real estate loan to make it more useful for CMBS players endeavoring to meet the risk retention requirements of Dodd-Frank.  See Dechert’s OnPoint for a more detailed description of the bill. Continue Reading

Risk Retention and the Regulatory State: What It Means to “The Folks” in 2016 and Beyond

RRWe may be approaching a tipping point where the burden of the new federal regulatory state, purportedly designed to make our economy stronger by making the banking system safer, will begin to demonstrably become a cure that’s worse than the disease. To my eye, much of the new regulatory apparatus feels like political theatre designed to impress the financial illiterate. Random chest thumping for populist cred on the cynical assumption that the system is big enough and robust enough to tolerate all this tampering.   Of course, I could be wrong and our policy elites could really be doing all this fiddling from an honest embrace of a simplistic, jejune analysis of extremely complex systems which they largely do not understand. I’m not sure which explanation scares me more. Continue Reading

DAMITT – How Long Does it Take to Conduct U.S. Antitrust Merger Investigations? (Update)

Dechert’s Antitrust Merger Investigation Timing Tracker (DAMITT) is at it again compiling data from 2015.

Fast Facts

  • DAMITT- Vuture graphics - 01-16-02Merger investigations in 2015 took an average of
    9.6 months to conduct (more than 1/3 longer than the average from 2011-2013)
  • Federal enforcement activity resulted in 37 significant merger investigations (7 generated complaints seeking to block proposed deals and 24 were resolved by consent orders)
  • Each of these figures was a record for the 5 years in which DAMITT has been tracking antitrust merger investigations

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