commercial real estate lending

Our fine little CRE CLO business has exploded over the past couple of years, hasn’t it?  Last year, around this time, I recklessly predicted for my friends at Commercial Mortgage Alert that we might hit $30 billion of issuance in 2021.   I was the outlier…by a lot.  Well, it looks like we’ll finish the year closer to $45 billion and it’s clear that in the first quarter of 2022 we will be on fire.  Now, of course, I also thought that we’d have a fantastic year in early 2020 and then that pesky little bug changed our lives, so please consider my on-fire prediction subject to caveats, limitations and restrictions including, but not limited to, disease, dictators and the possibility that the Fed is making a colossal mistake.

All else being equal, the CRE CLO business will continue to grow and I don’t really see the appetite for this technology receding any time soon.  Could it?  Sure.  Annoying black swans aside, if the curve radically changes shape and creates outsized demand for fixed rate product, the CRE CLO business, as it has grown up in the past couple of years, will see challenges.  But more on this later.Continue Reading The CRE CLO Unleashed

RRWe may be approaching a tipping point where the burden of the new federal regulatory state, purportedly designed to make our economy stronger by making the banking system safer, will begin to demonstrably become a cure that’s worse than the disease. To my eye, much of the new regulatory apparatus feels like political theatre designed to impress the financial illiterate. Random chest thumping for populist cred on the cynical assumption that the system is big enough and robust enough to tolerate all this tampering.   Of course, I could be wrong and our policy elites could really be doing all this fiddling from an honest embrace of a simplistic, jejune analysis of extremely complex systems which they largely do not understand. I’m not sure which explanation scares me more.
Continue Reading Risk Retention and the Regulatory State: What It Means to “The Folks” in 2016 and Beyond