On March 20, 2016, President Obama became the first United States president in almost 90 years to visit the island of Cuba, located a mere 90 miles from the coast of Florida—signaling not only a renewed diplomatic relationship between the United States and the communist country, but also, the dawning of a new commercial age which will undoubtedly transform Cuba and its real estate industry.
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Flash: Congress Fixes the CMBS Risk Retention Problem (Just Kidding)
Last week, the House Committee on Financial Services reported out the Preserving Access to CRE Capital Act of 2016 (the “bill”) in a remarkably bipartisan sort of way (paving the way for: “Well, yes, I did vote for it, but then I voted against it.”). The bill, which was drafted and backed by CREFC, would exempt certain single asset/single borrower securitizations from the risk retention requirements, would allow the B-piece buyer to acquire the risk retention piece in a senior/subordinate capital structure and loosen the criteria for a qualified commercial real estate loan to make it more useful for CMBS players endeavoring to meet the risk retention requirements of Dodd-Frank. See Dechert’s OnPoint for a more detailed description of the bill.
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CREFC Industry Leaders Conference 2016
The 2016 CRE Finance Council Industry Leaders Conference, held this week in Miami, was dominated by two topics– risk retention and liquidity. Almost all the forums, panels and presentations at the conference were overshadowed by the specter of risk retention and more general concerns about liquidity.
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If Interesting and Prosperous is a Choice, I’ll Take Door Number Two: Perspectives on 2016
As we do each year at Crunched Credit, we take the end of a calendar year as an opportunity to stop and reflect on where we are, and what the next year might hold. Recognizing the certainty that a successful prediction is more a random event – a blind cat finding a dead mouse, than a product of wisdom and analytic prowess, it remains an important exercise. It bears repeating that refusing to take a view is actually to make a choice, and a pretty silly one at that. So as we at Dechert churn through our budgeting and planning process for 2016, we will make some assumptions about the economic environment and adjust our planning accordingly. Let’s agree, we are going to be wrong about a lot of stuff – maybe everything – but that fact doesn’t excuse the critical need for having a macro view.
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With Its End in Sight, EB-5 Survives!
In an uninteresting turn of events last week, Congress has passed the Omnibus Bill, which contained a provision extending the EB-5 program until September 30, 2016, with no other changes to the program. As previously discussed, the last couple of months have been filled with substantial discussions and the introduction of potential legislation aimed at reforming the program, but at the end of the day, Congress has decided to “kick the can down the road” for another couple of months.
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The Death of EB-5 Has Been Greatly Exaggerated
Earlier this year we discussed the uncertain future of the EB-5 Visa Program, one of the most successful inbound investment programs of recent years, as evidenced by the $5.2 billion dollars the program has generated in the past ten years alone. Although the EB-5 Visa Program was set to expire on September 30, 2015, Congress approved a temporary extension that allowed the program to continue through December 11, 2015. But notwithstanding the growing popularity and success of the program and the enthusiasm about it from US domestic developers and property owners, it has always engendered some concerns and criticism. And so, here in early December, its future hangs in the balance. Supporters say the program should be renewed because it generates employment opportunities and funds domestic businesses that rely on these types of investments, but critics claim the program is poorly regulated and tainted by fraud and a certain odor of unseemliness. With the potential expiration of the program set to occur later this week, it is uncertain whether the program will lapse, become permanent, be temporarily extended “as is”, or extended with significant reformations.
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HVCRE: Surrender Is Not An Option
The way the new Basel III High Volatility Commercial Real Estate Lending Rule (HVCRE) was crafted, and is being enforced, is insane. We’ve written about this before. This is one of the purest examples of the regulatory apparatchik’s mule-headed refusal to look at data or engage with the banking establishment to develop thoughtful and effective rules. I think I saw a thoughtful and effective rule once.
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Risk Retention: Flash – These Rules Don’t Work!
As we begin to close in on the initial implementation of the Risk Retention Rule, we are looking beyond the headlines and trying to figure out how the Rule will actually work. The result is troubling.
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The EB-5 Visa Program: the Rebirth of the Immigration Investor Program
This is a good news story for once. But, of course, since the father of this soupcon of good news is our government, it’s almost unintended.
From the ashes of the economic recession of 2008 came the rebirth of the Immigration Investor Program, more commonly known as “EB-5 Visa Program.” This bit of social engineering has been around since the program was first introduced back in 1990 but got a second wind when everything else went to Hell. The purpose behind the program was to benefit the United States economy by attracting investments from qualified foreign nationals.
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CREFC New York City (June 2015) Conference Recap
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.
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