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Commercial Department: Q&A: Lisa Pendergast, Commercial Real Estate Finance Council: November 2010


Q&A: Lisa Pendergast, Commercial Real Estate Finance Council

Lisa Pendergast, 2010-11 president, Commercial Real Estate Finance Council

After an anemic commercial mortgage-backed securities (CMBS) issuance of $1.4 billion in 2009, the market is looking to rebound with $10 billion in issuance expected this year, according to The Wall Street Journal. Lisa Pendergast, president of the Commercial Real Estate Finance Council, formerly the Commercial Mortgage Securities Association, tells us why the market is turning the corner.

Why did the association change its name?

The name suggests an expansion into other providers of commercial real estate capital. Whether you’re a portfolio lender or a conduit lender or a securitized lender, we all need to be thinking along the same lines. We all need to have the same level of discipline in terms of our underwriting and our evaluation, as well as our investing. We need to work together.

What are your primary goals for your tenure as president?

We really need to focus on fine-tuning our best-practice efforts [and] working with regulators to determine what those best practices are. My objective is to try to move that forward as quickly as we can, to bring together all the various constituencies of this industry. [We need] to find agreement amongst the issuers and investors and servicers as to what works for them and what works in the greater context.

Why have CMBS issuances increased this year?

One of the key factors is that we are starting now, for the first time, to see actual transactions in the property markets. If you look at the pace of special-servicer dispositions of troubled loans, that’s increased significantly, and they’ve done that via either loan sales or asset sales. As those numbers increase, there will be a commensurate increase in the amount of CMBS transactions.

CMBS delinquencies also have increased. Will this keep new issuances down?

We are starting to see a slowing case of delinquent loans. But I do think there are two markets here. Most of those delinquencies are driven by recent-vintage deals, predominantly 2006 to ’07. Investors and the industry in general understand that that is reflective of a different environment, in which property values were not only at the top of the market, but there was fairly aggressive underwriting as well, and leverage was being pushed. Now things are quite different. Valuations are the lowest they’ve been in quite some time, [and there is] a new stand- ard of underwriting and leverage.

How would you describe the current commercial real estate market?

For the first time in quite some time, I think the market has really started to turn the corner. There’s movement now that was not happening prior to the past six months. That’s a real positive sign.


Jennifer Garrett was an editor at Scotsman Guide. For questions on this article, call (800) 297-6061 or e-mail

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