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Jamie Woodwell, MBA Vice President of Commercial/Multifamily
At CREF, Woodwell was one of several speakers to say that lenders have money to lend but that there's little borrower demand. He talks to us about why that is:
"One thing to keep in mind is that we tend to compare current levels to what they were in the peak of 2006 and 2007. We’re in the shadow of that now. To the degree a loan was taken out in 2005, '06 or '07, that loan probably won’t be coming due until 2015, '16 or '17.
"You also have the fact that given commercial property prices, if you’re an owner and you’re continuing to get cash from your property and you’re continuing to pay the mortgage, there’s probably not a whole lot of incentive for you to look to sell your property now, particularly with the uncertainty about the economy and the path of the recovery.
"Likewise, during '05, '06 and '07, there was a fair amount of demand for refinancing — where the rates were and where the terms were drove a lot of origination activity. It was a great time to borrow money.
"And now, again, a lot of those borrowers are locked in and a lot of others are just looking at the market now and saying, 'I’m probably not going to look into do a refinance now to get better terms or rates. I’m going to stick with what I’ve got.'"
— Ivanna C. Sukkar
Location, Location, Location
When: 10:45 a.m. to noon, Feb. 3
Sam Davis, senior managing director, Allstate Investments LLC (moderator)
Victor Calanog, director of research, Reis Inc.
Hans Nordby, global strategist, Property & Portfolio Research
Jon Southard, principal, director of forecasting, CBRE Econometric Advisors
Robert M. White Jr., president, Real Capital Analytics
What: Panelists discussed various property types and issues affecting each.
Southard discussed the office market. He said an increase in hiring by temporary-staffing agencies indicates that "the end is near" for the office sector's distress. The end varies by locality, however — "there are bad markets and worse markets" to choose from, Southard said.
On retail, Calanog said, it's as "flat as a pancake" and noted that vacancies are expected to increase through late 2011 for that sector. He added that retail is "traditionally overbuilt and underdemolished."
In discussing the apartment market, Nordby said that the next five years likely will see more household formation because of the echo-boomer population. He adds that this sector will be "a beautiful thing" in five years.
Overall, White summed up the prevailing attitude among panelists and conference attendees: "2010 will be much better than 2009."
Buyers and Sellers: How Do You Manage the Bid/Ask?
When: 2 to 3:15 p.m., Feb. 3
Brian F. Stoffers, president, CBRE Capital Markets (moderator)
Jeffrey F. Fastov, principal, Oasis Real Estate Partners LLC
Peter Tobin, managing director, Mission Capital Advisors LLC
Stuart Wernick, senior vice president, Grandbridge Real Estate Capital LLC
What: Panelists agreed that most property-owners have little incentive to sell in today's market. For those who are selling, managing the bid-ask spread has become a primary issue.
Stoffers asked the session's panelists, "What is the new normal?"
The "new" normal for valuations appears to be a return to the early part of the 2000s, Tobin said. He pointed to 2002 as "a more reliable indicator for values than recent appraisals when [lenders are] re-underwriting."
In addition, Wernick echoed a common sentiment among the conference's speakers and attendees: "There's a lot of new money and new lenders out there, but the focus needs to be on job growth."
Bank Lending: Busting the Myths
When: 3:30 to 4:30 p.m., Feb. 3
E.J. Burke, executive vice president and group head, KeyBank Real Estate Capital (moderator)
Christopher Arnold, senior vice president, Liberty Bank
Charles H. Fedalen Jr., executive vice president and group head, real estate banking group, Wells Fargo Bank
Kevin J. Pearson, executive vice president, M&T Bank
Jeffrey R. Schmid, chairman and CEO, Mutual of Omaha Bank
What: Banks aren't lending money. This is one of the myths in today's industry that panelists in this session sought to debunk.
Schmid, a regulator-turned-banker, said that this sentiment was not a myth in 2009, but it may be now.
"It depends on the market," he said. "If client relationships make sense [to lenders], the chances are the deals will make sense."
Arnold added that in the past year, the market has become more competitive. He noted that liquidity is less of an issue that previously and that banks now seek recourse.
"The hardest part is finding properties to finance, not the money to finance them," Fedalen said.
Ivanna C. Sukkar is senior associate editor at Scotsman Guide. Reach her at (800) 297-6061 or email@example.com.
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