For 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.
One of Tuesday’s highlights was what has become a staple at every CREFC conference, Jack Cohen’s industry roundtable, featuring over two dozen industry leaders offering their views on market fundamentals in an entertaining and informative format.
Tuesday also played host to what is likely the most widely attended session of any CREFC conference, the keynote luncheon. This conference’s keynote was delivered by Ian Bremmer, a renowned political scientist, author, Foreign Columnist and Editor-at-Large at Time, and President and Founder of Eurasia Group. Bremmer offered a colorful overview of current world issues and their potential impacts on the U.S. and particularly on commercial real estate.
The conferences rounded out on Wednesday. As I reflect on the various sessions attended, the following themes stand out as having been raised with some frequency:
- Risk Retention. While there is still uncertainty around how risk retention requirements will impact the CMBS market and some market dislocation is likely, b-piece buyers and issuers alike are working toward facilitating the implementation of the final rules.
- Interest Rates. Many expect that recent increases in interest rates will cause borrowers to scurry to refinance, making for a busy second half of 2015.
- CMBS Deal Sizes. While deal sizes have increased as compared to early CMBS 2.0 deals, a number of factors continue to constrain deal size—among them, the composition of the investment grade buyer market (with not many IG buyers looking to pick-up large positions).
As attendees shuffled out on Wednesday, some headed to their offices in New York City, others to airports and train stations to start their trips home. No matter our destination, there was a general positivity in the air; a sense of having put the recession well behind us and a relative impression of stability, at least in the near term.
Dechert has recently published a number of articles on risk retention. For additional information on this topic, please see below.