By Jennifer Garrett, editor, Scotsman Guide Media | bio
Robert M. White, Jr. President, President and Founder, Real Capital Analytics Inc.
Keeping pace with changes in the commercial real estate
market seems near impossible. Yet Real Capital Analytics, a research firm that
focuses on commercial capital markets, aims to do just that. Despite the near
disappearance of commercial-mortgage-backed securities (CMBSs) from the market,
Robert M. White, Jr., the firm's president and founder, sees some positive
can the industry respond to decreased CMBS issuance? Capital
always finds the areas it’s needed. We’re certainly starting to see new funds
created, whether they’re out to buy distressed mortgages or originating
mezzanine loans. That’s all part of the solution to the problem.
Ultimately, confidence has to be restored in the underwriting.
The industry has a lot to do to restore confidence, but more conservative
underwriting will certainly help.
global trends affecting U.S.
markets? More people are looking abroad. [Investors] of risk
capital [are] looking at emerging markets, and emerging markets are definitely
capturing much more of it. And even institutional capital — the pension-fund
money — its allocations to international investments have grown something like four-fold
in the past two years and are rising.
The U.S. is benefitting because we are also starting to see a
fair amount of foreign capital [invested in] U.S. properties.
are international markets feeling the U.S. credit crunch? The
transaction volume is down more severely here in the U.S.
than in any other country, but it’s also off fairly significantly in Europe.
Europe has not seen the same drop in transaction activity, but it
already has experienced greater declines in prices than we have here in the U.S. so far.
you anticipate seeing the same drop here? We will continue to see
prices decline. I don’t expect to see them fall off the cliff.
The biggest difference is that so far the sellers in the U.S. have been fairly strong. Although they have
a lot of property on the market, they are not accepting prices that are too
I think mortgage delinquencies are a good barometer of the pain
and pressure out there, and they’re still at fairly low levels. They’ve been
increasing, but they haven’t been spiking.
does the future of capital markets and the commercial mortgage market look like?
At least for the U.S., there’s still a lot of capital that
[investors] want to be in real estate. Certainly, no one is anxious to invest
in the stock market. With inflation looming, bonds don’t look too appealing. In
fact, inflation makes real estate look more attractive.
We’re already seeing some of that capital starting to filter into
the debt market through mezzanine [financing]. If we can start getting a little
debt liquidity, and we are able to skirt a major recession, things could turn
around fairly quickly. Those are big ifs, though.
Jennifer Garrett was an editor at Scotsman Guide. For questions on this article, call (800) 297-6061 or e-mail email@example.com.
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