I Hear This Cries Out for Regulation!

As we all marinate in the difficulties of Mr. Zuckerberg, who, at the end of the day, can certainly salve any wounds with a net worth measured in the tens of billions of dollars, I was struck by the continued drumbeat for “REGULATION.” Now, perhaps I am ill equipped to discuss Facebook, not being a participant and therefore never having clicked through a lengthy agreement on privacy (or the lack thereof), but I have some thoughts. I’ll largely leave the ethics of the privacy contretemps to others, but I was struck by the parallels between the current kerfuffle over Facebook and privacy and the Dodd-Frank mess, lo these ten years past.

Let’s start with this dictum: Beware the politician bearing new and comprehensive regulatory gifts for the American people. Continue Reading

Morningstar Requests Comments on Proposed Rating Methodology for SASB Deals

By Caroline Bell and Justin J. Gdula on April 17, 2018 Posted in CMBS, Commercial Mortgage Finance, Commercial Real Estate, Securitization

Morningstar has published a proposed method for rating single-asset/single-borrower (SASB) transactions. The new approach is slated to replace the “U.S. CMBS Subordination Model” with respect to SASBs and other forms of CMBS securities with similar credit and diversity profiles, including large-loan transactions and rake certificates. Morningstar has issued a request for comments on the proposal. We plan to provide our thoughts, described below, before the April 20^th deadline, and encourage you to do the same. But first, answers to what are sure to be your most burning questions:

The Day I (Almost) Met Mark Zuckerberg

By Krystyna Blakeslee and Gina Leahey on April 12, 2018 Posted in Commercial Real Estate, HVCRE

It’s day 2 of Mark Zuckerberg’s Congressional debut and I still have yet to catch a glimpse of him or his entourage. But – I have had the opportunity, with some fellow industry players, CREFC staff and members of the CREFC-HVCRE Working Group, to meet and speak with members of the House Financial Services Committee (Andy Barr and Trey Hollingsworth), Senate Banking Committee staff and regulators from the FDIC, OCC and the Fed. The topic on hand: not Facebook or Russia, but HVCRE and HVADC. Continue Reading

More Fun with LIBOR

By Rick Jones and Jonathan Gaynor on April 9, 2018 Posted in Financial Reform, Regulatory

Geeking out, I just finished reading the second report from the Alternate Reference Rates Committee that was just published jointly by the Financial Stability Board (FSB) and the Financial Stability Oversight Council (FSOC) in cooperation with the Alternate Reference Rates Committee (ARRC). Does that scream bureaucracy in full, or what? The report runs 40 pages, awkwardly pats itself on the back (with a net back-patting surplus allocated amongst the Federal Reserve, the U.S. Department of the Treasury, the U.S. Commodities Future Trading Commission and the Office of Financial Research) for confirming that we need a LIBOR replacement and the Secured Overnight Funding Rate (SOFR) is way better than the Effective Federal Funds Rate (EFFR) or the Overnight Bank Funding Rate (OBFR). Ergo SOFR is the ARRC’s preferred alternate rate upon the expiry of the spavined LIBOR. Continue Reading

Dechert’s Cryptocurrency and Blockchain Tracker: The Times They Are A-(Block)cha(i)ngin’

By Jonathan Gaynor and Krisia Ildefonso on March 27, 2018 Posted in Uncategorized

Come gather ‘round people wherever you roam because, with apologies to Bob Dylan, in the past year the blockchain and cryptocurrency waters have grown. In less than a year these topics went from obscure lore to a multibillion dollar question on most everyone’s mind. From tokenized securities to decentralized ledgers to smart contracts, blockchain technology will fundamentally change the landscape of financial services and real estate as we know it – and fast! In one minute, an initial coin offering (ICO) raised $36 million for a new venture. In one day, cryptocurrency markets can experience Great Recession-level gains and losses. And in the time it took you to read this, a techie in Silicon Valley probably developed another application of blockchain technology to transform an entire industry.

If your time to you is worth saving’ then you better start swimmin’ and we at Dechert are here to help. In order to keep you up to blockchain speed, we at Dechert are excited to provide the Cryptocurrency and Blockchain Tracker, where we cover all of the latest developments in the cryptocurrency and blockchain spaces, including regulatory status updates, tax implications, the use of real estate tokens and ICOs and more.

So if you don’t want to sink like a stone, subscribe to receive email alerts or visit the Cryptocurrency and Blockchain Tracker for more tales from the crypt(o) (and other mediocre puns). And if you want to talk about all of this, please reach out to Rick Jones, Bruce Bloomingdale or Tim Spangler for more information about how blockchain technology continues to affect finance, real estate and securitization matters.

The Urge to Merge

By Rick Jones and Jonathan Gaynor on March 20, 2018 Posted in Commercial Mortgage Finance, Liquidity

Will 2018 be the Year of Concentration across our market? “The Urge to Merge” was the title of a January 2, 2007 Economist article. It resonates today. The cover photo was two camels copulating, which some of the Economist readers, surely a high-brow and sensitive bunch, apparently found offensive, as the picture is nowhere to be found on the internet. They would not allow me to republish the pic. A priggish fastidiousness that does not reflect well.

Seriously, 2018 could be the year of significant concentration across much of the CRE non-bank space, and perhaps some portions of the prudentially regulated bank space as well. Continue Reading

No “Fake News” Here – Just the Facts on HVCRE

By Krystyna Blakeslee and Gina Leahey on March 16, 2018 Posted in HVCRE

In case you’ve been too busy sifting through fake news to follow efforts to reform the High Volatility Commercial Real Estate (HVCRE) regulations that affect acquisition, development or construction (ADC) loans, here’s where we are and where we think we are going. Continue Reading

IMN 2018 New Hotel Development and Construction Conference

By Jessica Bula on March 5, 2018 Posted in Commercial Real Estate, Real Estate, Regulatory

Last week IMN hosted an inaugural New Hotel and Development Conference in New York City. The gathering of developers, hotel operators, brands and other hospitality service providers was very upbeat. Many panelists indicated that they were more optimistic now than they had been six months ago. They credited the state of the macro economy and stimulus provided by the recent tax reforms. Continue Reading

The Astonishingly Shrinking Risk Retention Rule – SASB Transactions Unshackled

By Rick Jones and Kenneth D. Hackman on February 27, 2018 Posted in DechertOnPoint, Risk Retention, Securitization

I don’t think risk retention is applicable to a direct issuance securitization. Many single asset, single borrower (SASB) transactions can be structured to avoid the need to retain risk under the Dodd-Frank Act and the attendant Risk Retention Rule. There. I’ve said it. Read on. Continue Reading

2018 MBA Conference – Soaring into 2018

By Kenneth D. Hackman on February 23, 2018 Posted in CMBS, Commercial Real Estate, Seminars and Conferences

Fresh off the Philadelphia Eagles’ first Super Bowl victory, a group of Dechert attorneys and 3,500 of our industry colleagues descended on San Diego for the Mortgage Bankers Association (MBA) CREF/Multifamily Housing Convention & Expo. While those of us on the cross-country flight from Philadelphia were in a particularly jubilant mood, it was clear from the conference that the commercial real estate finance industry was also ready to keep the party going.