LIBOR is going away, but that’s sort of old news at this point. However, it has been received wisdom that only after the Bank of England stops imposing an obligation upon member banks to publish LIBOR quotes as at the beginning of 2021, would LIBOR go away
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 20th deadline, and encourage you to do the same. But first, answers to what are sure to be your most burning questions:
Continue Reading Morningstar Requests Comments on Proposed Rating Methodology for SASB Deals
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 The Day I (Almost) Met Mark Zuckerberg
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 IMN 2018 New Hotel Development and Construction Conference
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.
Continue Reading 2018 MBA Conference – Soaring into 2018
Around this time of year, we slip on the prognostication goggles and take a look forward into the next year. While there is ample evidence that prognostication is a dodgy exercise, I always tell my folks that the fact that it’s hard to do and extraordinarily unreliable is not an excuse not to have a view. To not have a view is actually to have one and just not acknowledge that you do. It doesn’t matter how unlikely we are to get it right: planning beats clinging to guns, God and Brownian motion as a model for the well-lived life.
Continue Reading In 2018 We Are: (a) Doomed, or (b) in the Warm Embrace of Goldilocks
The Trump administration and Congress have lots on the agenda: tax reform, financial regulation reform, job creation (think infrastructure spending, maybe?) and more. While it seems unlikely that much of anything “real” is going to happen anytime soon or even this year (other than more drama, more tweets and more Trump-isms), there’s some hope for a fix for the many failings of the High Volatility Commercial Real Estate (HVCRE) Rule.
Continue Reading HVCRE: Busting Myths
Well, we’ve had the big reveal and the administration’s new tax plan is out. This plan, announced with a great deal of fanfare, feels more like a campaign promise than an actual executable plan. At two hundred forty-six words from end to end (four different typesets, three different fonts, three colors, weird spacing and a sad little dash at the top), anyone who was hoping for clarity and a plan to go to the bank on, is either disappointed… or perhaps relieved.
Continue Reading Have Yourself a Very Trumpy Tax Plan
Since my earliest days in the CRE capital markets biz, there has always been a drumbeat of grumbling from the borrower community about the annoying complexity, expense and delay of having one’s loan serviced in a capital markets transaction. It’s been going on forever. Like noise, like listening to Brits complaining about their weather; it’s ubiquitous, apparently personally gratifying, but largely inconsequential for outcomes. The business goes on. Data indicates that as many as 60% of all new CMBS loans come from refinancing non-CMBS loans, so it’s not like a structured finance ghetto here. The sell side takes comfort from the old saw that no sensible borrower would go to the CMBS window except as a last resort… like, three basis points or five bucks in extra proceeds. Ok, that’s a tad too harsh and dismissive. But going to the capital markets window for lower rates, more proceeds or less recourse is entirely rational. On the other hand, the narrative about the pain through servicing in the capital markets is also real.
Continue Reading The Dilemma of the Really Annoyed Borrower
The doctrine of substantive consolidation (generally- the power of a bankruptcy court to consolidate the assets and liabilities of affiliated entities in bankruptcy) is a recognized remedy exercised by bankruptcy courts – one that strikes fear into the hearts of many lenders. Justifiably so. The doctrine can be employed to order the substantive consolidation of related-debtor entities in bankruptcy and it can also be employed to substantively consolidate the assets of a debtor in bankruptcy with those of a related entity that is not a debtor in bankruptcy. Picture this: A parent entity files for bankruptcy and all the goodies are in a series of subsidiaries and the companies have never respected corporate niceties. The bankruptcy court presiding over the bankruptcy of the debtor-parent entity orders that the non-bankrupt SPE borrower will be dragged into bankruptcy and its assets used to satisfy the creditors of both the SPE borrower and the parent. Ta da.
Continue Reading Substantive Consolidation: It’s Alive and Well (or Maybe Just Alive)