IMN 2018 New Hotel Development and Construction Conference

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

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

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.

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I Urgently Want to Report the Deaths of the Non-Con Opinion (But Probably Cannot…Yet)

Our friend, Dan Rubock, just inked an interesting and timely piece entitled, “Key pillars of loan structural quality are eroding, especially in single-borrower deals.”  As usual, Dan’s views at Moody’s are worth considerable attention.  That piece focused on bad-boy carve-out guaranties, the quality of borrower financial information, property release provisions, qualified transfer provisions and cash sweep triggers.  While reasonable professionals can differ on both the incidence and the impact of the deterioration of these deal features, the point is well taken that the deterioration of legal structural features in CRE lending is often a canary in the mine for… excessive exuberance.  I’ll put off litigating Dan’s points for a future time, but this got me thinking about all that we do in legally structuring loans for the capital market.

Much of the playbook for capital markets CRE lending was established at the dawn of this business.  At that time, Dechert was outside counsel to S&P and for good or ill, Dechert was responsible for much of the early architecture of CRE documentation and legal underwriting.  While these criteria have been periodically tweaked over the years and adapted to changes to the underlying CRE lending market, the original architecture is still pretty much in place.

I would posit that it is an industry failing that we haven’t really given legal underwriting a thorough rethink in 30 years.  Here’s a start. Continue Reading

2018 CREFC January Conference – Plateau or Status Quo?

South Beach played host to the 2018 CREFC January Conference last week, as roughly 1,800 of our best friends in the CRE lending and securitization industry assembled in Miami to reflect on another year gone by and to muse about what’s in store (or out of store, in the case of retail) for 2018. In keeping with tradition, Dechert’s reception at the SLS Hotel was a hotbed of schmoozing, deal talk and employment fair, as over 400 guests took a break from discussing the SEC to… watch the SEC. The excitement of the Alabama-Georgia national championship game was a welcomed excuse to extend the party well beyond the official ending time (a move that is quickly becoming an expected budget buster for this annual event).

As usual, Dechert was well represented at the conference. Dechert’s Laura Swihart served as conference co-chair, and Rick Jones moderated a riveting (ok, not so riveting) panel on “Floating Rate Loans: Circa 2018”.

Conference panelists and attendees were generally bullish, and why wouldn’t they be after a 2017 that saw $95.3 billion in U.S. CMBS issuance (not including the GSEs). For color, that number is up more than 25% from 2016. Not a bad way to usher in the risk retention era. Continue Reading

In 2018 We Are: (a) Doomed, or (b) in the Warm Embrace of Goldilocks

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.

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Our Nation’s Capital Has Dog Poop Police, But We Let the Congress Do This?

Did you know that the District of Columbia has assigned officers to enforce its police-your-dog laws? The Poop Police. How low do you have to go, how badly do you have to screw up to be assigned in the District of Columbia to the Poop Police? Do they go under cover? Do they pack heat? In risible juxtaposition to this Singapore-like nod to order and governance, we see our Congress attempting to do tax reform. What a mess. As I write this, the Tax Conference Committee has apparently settled on something and we will likely see a vote in both Houses this week. The belly-scratching, horse trading, posturing and the manufacturing of sly optics…ugh. At least it is almost over. Something to be said for that. It was a sorry exercise.

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Does the ICO Open a New Chapter for RE Crowdfunding?

Back in July of 2015, we blogged about “Current Marketplace Trends in Real Estate Crowdfunding”.  How young and breathless we were, in hindsight, now that we’re tapped into the Next Big ICO thing.  Yes, the “fintech” world has apparently leapt forward into the dawning age of the ICO without so much as a backward glance, still unfettered by the restraining hand of regulation (such as the JOBS Act “exemption”, which seems to have throttled old-world crowdfunding in the cradle).

But wait a sec—just what is an ICO?  Continue Reading

Third Party Purchaser Agreements Don’t Destroy Sale Treatment: A Victory for the Unintended Consequences Resistance

Every once in a while we get some good news around the capital markets hood and this is one of those times.  Admittedly, all we’re doing here is fixing a problem which was one of the unintended consequences of the Dodd-Frank regulatory regime and just gets us back to where we thought we were before the issue arose, but hey – a victory is a victory.  Continue Reading’s 8th Annual Golden Turkey Awards

As we look back each November to bestow the year’s crop of Golden Turkeys to the silliest and most annoying instances of regulatory overreach, legislative inanity, governmental misfeasance or the mere idiotic behavior of people without any help from the government apparatchiki, there’s always a glorious excess of candidates. This whole commentary thing would be really hard if the world made sense and behaved in a predictable, rational, Newtonian universe sort of way, but blessedly it does not.

So, as we get ready for the season of cheer, the season of desperate efforts to close yet one more deal and the nice calculation of bonuses, and before we imbibe too much good food and drink to be at all disciplined, here is our list for 2017: Continue Reading