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It’s a good time for disaster movies…Civil War, The Day After Tomorrow, Armageddon and, of course, in the theatres right now, Godzilla vs. King Kong.  Fun on the big screen, not so much in real life.  Have you seen Godzilla vs. King Kong?  A guilty pleasure (like eating ice cream…

I perhaps have a well-earned reputation for an excess of fascination for risks, downside, black swans and other things that prevent the good times from rolling.  Lover of Schadenfreude.  I hope not, but I do often feel compelled to point out risks that seem to be overlooked. 

I could be wrong (shocked…I’m shocked!).  What happens…

Trading Is Not a Dirty Word and Other Thoughts on a More Manageable CRE CLO

As we begin to reflate the CRE CLO business this year with shrinking spreads and hopefully shrinking SOFR, we need to think of this as CRE CLO 3.0. This business,  this technology, which is truly a brilliant way to deliver…

I’ve written extensively about the CRE CLO technology for a long time and why it is the best leverage technology across securitization markets.  With the sponsor typically holding up to 20% of the bottom of the capital stack, it represents the best alignment of interests between sponsor and investor.  For the sponsor, it provides unique…

I wrote about the disconnect between our CRE CLO technology and the task at hand (finding acceptable lever in an expanding leverage desert) in my last commentary.  While the CRE CLO remains the best form of match-term, non-marked-to-market finance for portfolio lenders and represents the best alignment of interests between sponsor and investor across the…

CRE CLO technology is languishing in the toolbox.  A combination of high interest rates, a mispriced legacy book, an anxious investor base and no real need to refresh capital until borrowers start borrowing again is largely responsible.  When a tool just doesn’t work anymore, you don’t throw it away, you fix it.  I like this…

The current administration’s legislative initiatives are largely bottled up in a split Congress, so the path toward achieving the White House’s policy priorities runs almost exclusively through the executive order and rule-making process and boy, have they worked it hard. 

But Santa is coming down the chimney delivering lumps of coal so often these days…

If the wisdom of crowds has any validity (and there’s no real evidence that it’s any worse than the pontifical huffings of the chattering class), then there’s hope for 2023.  Optimism did itself proud at CREFC.  We’ll see if that optimism is recapitulated at SFVegas and at the MBA CREF meeting coming up in the…

It’s Golden Turkey Awards Time, Folks!

Our Turkeys are a little late this year but hey, we’ve been busy worrying about the collapse of the world’s economy.  This is the 10th edition of our Turkeys and much thanks to our disorderly, often dysfunctional, regularly inscrutable and absurd government, polity and marketplace for continuing to…

The conduit market does not absorb a lot of bandwidth in my day-to-day practice; I’m more of a CRE/CLO/warehouse/SASB/new products/innovation sort of guy.  But it’s painful to watch this marquee capital markets product wither away, a product that  transformed $200 billion of mortgage loans into securities in a single year.  That biz might limp over the finish line with a meager $25 billion this year.  What happened?  The demand for CRE leverage certainly hasn’t changed.  The CRE market has gotten significantly bigger since 2008 and consequently, the need for leverage has grown concomitantly.  The nature of the underlying real estate assets hasn’t changed all that much, nor the nature of the ownership structure, albeit it is probably a bit more institutional today than it was in 2008.  The product is no different, in large measure, today than it was back then and indeed in some minor, twiddling respects might even be better from the perspective of the borrower.
Continue Reading Can We (Should We) Try to Fix the Conduit Before It’s Gone?