Risk and Rewards of CRE-CLO and CLO Securitizations: Navigating the Capital Markets

93850823-1More than 100 senior executives participated in Dechert’s Risk and Rewards of CRE-CLO and CLO Securitizations: Navigating the Capital Markets seminar.  The half day event, supported by  CRE Finance Council (CREFC) and the Loan Syndications and Trading Association (LSTA), focused on themes important to the CLO market and the CRE securitization market.  Panelists addressed market issues, structure and structural issues as well as regulatory and tax considerations.

Very senior and knowledgeable panelists from institutions including  Wells Fargo Securities, Crescent Capital, Guggenheim Partners, KPMG, Latitude Real Estate Investors, TCW, Western Asset Management Co. as well as government relations experts from both CREFC and LSTA discussed issues ranging from structural innovation, dealing with the new risk retention rules and market considerations relevant to sponsoring, issuing and investing in real estate and non-real estate CLOs.

To access a recording of the sessions, please click here.

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Photo credit: Chance Agrella / Hemera / Thinkstock

Grexit Deferred: The End of the Beginning for Greece?

euroFor want of a baker, a job was lost.  For want of a job, the economy was lost.  For want of an economy, the banking system collapsed.  For want of a banking system – well, ultimately Grexit.

Grexit, Grexit, Grexit, Grexit, Grexit, Grexit, (China), Grexit, Grexit. The Greeks will be fine, right?  There is no such thing as contagion, right?  Your lips to God’s ear, please. As I write this, the Greek Parliament has approved the bailout and it looks like an immediate Grexit is off the table, (although the Germans are none too pleased)!  Wonderful. Continue Reading

Current Marketplace Trends in Real Estate Crowdfunding

iStock_000009267719_DoubleToday, there appears to be an ever-expanding number of sponsors and markets for crowdfunding.  Commercial real estate is no exception. At the recent IMN US Real Estate Opportunity & Private Fund Investing Forum, Elizabeth Braman, Chief Production Officer of Realty Mogul, presented at a session focused on crowdfunding for real estate.  It was very well attended.  Dechert and CRE Financial Council (CREFC) recently hosted an equally well attended seminar in San Francisco featuring leaders in the field to discuss the current state of crowdfunding debt and equity real estate investments and that discussion, in our thinking, was illuminating about this fascinating, and perhaps fraught, new business. Continue Reading

US Real Estate Opportunity & Private Funds Investing Forum Recap

nyseThe 16th Annual U.S. Real Estate Opportunity & Private Funds Investing Forum was held in New York City on June 15 and 16, bringing together private real estate fund sponsors, limited partners, and other industry participants. Over two packed days of panels, networking, and “shark tank”-style panel demonstrations, industry participants shared their views on the current state of the commercial real estate market, fund raising and predictions (from a fund investor’s perspective) for the near future. Continue Reading

The EB-5 Visa Program: the Rebirth of the Immigration Investor Program


This is a good news story for once.  But, of course, since the father of this soupcon of good news is our government, it’s almost unintended.

From the ashes of the economic recession of 2008 came the rebirth of the Immigration Investor Program, more commonly known as “EB-5 Visa Program.”  This bit of social engineering has been around since the program was first introduced back in 1990 but got a second wind when everything else went to Hell.  The purpose behind the program was to benefit the United States economy by attracting investments from qualified foreign nationals. Continue Reading

Risk Retention – “How I Learned to Love Risk Retention and Live With It.” (Apologies to Stanley Kubrick)

93850823-1As time goes by we start to get close to the first of two risk retention effective dates; December 24, 2015 for residential product and everything else looming December 24, 2016 (does anyone really think a Christmas Eve Effective Date was unintentional?  Bah, Humbug!).  More and more attention is now beginning to focus on the Risk Retention.  We are grappling with the Rule right now in our resi market, in the CLO space where reissuance is a common deal feature (bringing forward 2017 concerns to today’s deals) and in the Single Family Rental (SFR) space which, much like the coupling of a donkey and a horse, is an oddly structured mule of a deal where no one is certain when risk retention will apply. Continue Reading

CREFC New York City (June 2015) Conference Recap

rooftopFor all of us in the commercial real estate industry, June has become synonymous with summer CREFC, a mid-year industry check-in and opportunity to mingle with industry participants.  Like past conferences, this year’s conference, which was held earlier this week, was once again filled with informative industry updates and lively panel discussions.

On Monday, much of the morning and early afternoon was devoted to various industry forums.  The day culminated with a panel titled “What Industry Titans Think of the Markets,” moderated by Citigroup’s Thomas M. Flexner, and panelist Richard LeFrak of the LeFrak Organization, Stephen M. Ross of Related Companies, and Robert S. Taubman of Taubman Centers, Inc.  Monday evening was filled with receptions hosted by a number of industry players, including Dechert’s own reception at the Refinery Hotel Rooftop. Continue Reading

Whom the Gods Would Destroy, They First Make Meet A Higher Regulatory Capital Burden

Or perhaps Prometheus had it right in its original form. “Whom the Gods would destroy they first make mad.”  Look at what we are doing to construction lending in the name of our seemingly endless safety and soundness crusade.

Under the new regulatory capital rules, we have a new asset class; HVCRE or High Volatility Commercial Real Estate.  HVCRE includes acquisition, developments and construction loans.  These loans are assigned a risk rating of 150% of the basic risk rating for commercial real estate.  Now, to be fair there are limitations and exceptions to the type of loans that attract this higher regulatory capital requirement, but those are somewhat at odds with the realities of the market.  Just by way of a few examples, to avoid HVCRE status the borrower must have 15% cash equity.  The rules about what is and what is not cash equity are artificially restrictive and not in all respects in accord with the market practice.  So-called soft costs count but appreciation in the value of the real estate is disregarded; only cash paid at acquisition counts.  As a property is held for longer and longer, this makes increasingly little sense.  Why is land value equity any less real than cash invested for so-called soft costs?  I have never met a developer without a fabulist view of what should be counted as soft costs.  Please, I’ll take real live equity in the dirt any time.  Also, for reasons which are entirely obscure, one cannot count the borrowers’ other free and clear assets, letters of  credit, cash or unencumbered readily marketable securities held on account of the borrower.  Also neither preferred equity nor subordinated debt counts. Continue Reading

A Guide to UK Real Estate and Real Estate Finance: Why Don’t You Speak Proper English?

big benThis month’s decisive, if unexpected, victory for the Tories has given a boost to the UK’s real estate markets. Following an already strong 2014 and now with even higher expectations for continued growth in 2015, the UK is an interesting play.  In light of this amiable confluence of factors and the increasing difficulty of finding yield here in the States, it’s perhaps time for a rousing rendition of George M. Cohan’s “Over There.”

And hey, legally speaking, it’s a terrific place to invest.  It’s a hot bed of red in a tooth and claw capitalism (at least compared to our other European friends).  The UK has a robust and broadly understandable legal system and a respect for property rights soundly rooted in the common law; all in all, a genial environment for investment. Continue Reading

Commercial Real Estate and the Broader US Economy: What Me, Worry?

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