SAW IT By Darrick Meneken
2009 Mortgage Bankers Association CREF/Multifamily Housing Convention and Expo
Things will get worse before they get better.
That was the sentiment this past Feb. 8-11 in San Diego, where more than 2,000 commercial-mortgage-industry professionals gathered for the annual Mortgage Bankers association (MBa) Commercial real estate Finance (CreF)/
Multifamily Housing Convention and expo.
“We are in a seized-up marketplace,” said John a. Courson, MBa’s president and chief executive officer, on Feb. 9. “if
we don’t change some of the basic tenets built into our business, then i don’t know if we get a second chance.”
Conference attendees discussed possible solutions, market trends and when the recession might end — among many
other topics — during a series of breakout sessions.
Here’s a synopsis of five CreF sessions most relevant to commercial mortgage brokers.
Political Landscape: Legislative and Regulatory Challenges
■■ Who: richard Jones, partner, Dechert LLP ■■ When: 10: 45 a.m. to noon, Feb. 9
(moderator); Keith Dunsmore, partner, ■■ What: This session, held eight days before
Powell Goldstein LLP; Stephen O’Connor,
President Obama presented his federal eco-
senior vice president of government affairs,
nomic-stimulus package, focused on legisla-
Mortgage Bankers association; Kieran P.
tive efforts to reinvigorate credit markets.
Quinn, vice chairman, Walker & Dunlop “The key is to get some kind of bill out
inc.; Catherine Cruz Wojtasik, associate there to get the economy going again,”
vice president of legislative affairs, Mort- O’Connor said. “There is a quiet sense of
gage Bankers association desperation.”
in many cases, that desperation traces back to depreciating mortgage-backed
securities eating away at lenders’ available capital. Government efforts
to remove some of these assets from lenders’ balance sheets still were subject to debate following the CreF convention.
“You have two worlds colliding — the
Washington world and the Wall Street
world,” said O’Connor, adding that the
trick is to get institutions to restart lending
without putting them at risk of failure.
Capital Markets: The
Evolving Market Model
Loan Origination: The
Valuations, Trends and the
■■ Who: Kieran P. Quinn, vice chairman, Walker & Dunlop inc. (
moderator); Tim Bitsberger, former assistant
secretary for financial markets, U.S.
Department of Treasury, and former senior vice president and treasurer, Freddie Mac; Warren Friend,
managing director, Deutsche Bank;
richard Jones, partner, Dechert LLP;
James Palmisano, managing director,
Standard & Poor’s; Paul vanderslice,
managing director, Citigroup Global
■■ When: 2 to 3: 15 p.m., Feb. 9
■■ What: Will securitization return?
That question framed this panel discussion, and it raised two additional
1. Who’s left to buy securities?
2. Who’s left to originate loans?
“The market will start to function
again when these types of things are
rectified,” Bitsberger said.
anyone who attempts to revise loan
conditions must be extremely diligent
when dealing with servicers, accord-
ing to panelists. The key is to be hon-
est and to deliver complete packages.
Brokers who foresee borrowers’ work-
out needs and get a jumpstart on the
process can position themselves for
if and when securitization does
return, the panel noted, it likely will
be in a different form and with more
To view selected presentations from
the 2009 MBA CREF/Multifamily
Housing Convention and Expo, visit
■■ Who: Mark Wilsmann, managing
director, MetLife inc. (moderator);
Martin Lanigan, CeO, emerald Capital Finance; Timothy McGinnis, managing director, real estate group, New
York Life investments; Daniel Smith,
managing director, rBC Capital Markets; Clay Sublett, national production manager, KeyBank real estate
Capital; James J. Mazzarelli, managing
director, Transwestern realty Finance
■■ When: 3: 45 to 5 p.m., Feb. 9
■■ What: Now is the time that all cash
players “get to name their terms,” Sublett said.
That’s great news for those sitting
on a mound of cash, but what about
everyone else looking to invest in
commercial real estate this year?
“Never has the intermediary served
a more important role,” Sublett said.
“[Borrowers] are going to be saying,
‘Get me a loan, any loan.’”
For brokers, coming through on
that request won’t be easy. Those
who work with good properties in
good locations — and backed by solid
sponsors — will have a head start, according to McGinnis. He added that
he thinks smaller, regional banks will
continue to represent a good funding
Lanigan said he agreed but added
that these banks are a Band-aid, not
a permanent solution.
Mazzarelli also urged a focus on
cash flow. That can remove some of
the burden from value, he said, noting that simpler deals — think one
senior debt-holder, one junior debt-holder and borrower equity — are
■■ Who: Brian Stoffers, president, CBre
Capital Markets (moderator); Michael
B. Cohen, research strategist, Property & Portfolio research inc.; Jamie
Woodwell, vice president-commercial/
multifamily research, Mortgage Bankers association
■■ When: 10: 45 a.m. to noon, Feb. 10
■■ What: Cohen’s statistics-packed report about the apartment market
highlighted this breakout session. His
predictions included the following:
Overall U.S. apartment vacancy
rates will peak at more than 8 percent in 2010.
Demand for apartments will bounce
back between 2011 and 2013.
By the end of 2010, apartments will
have experienced the greatest value
declines among the top-four property types — apartment, office, retail
and industrial — during the previous
Apartment capitalization rates will
stabilize around 7 percent in 2010.
Brokers should understand the job
base and market fundamentals of any
area in which they intend to work,
He also looked at the retail segment, noting that the 54 primary
U.S. markets all show contraction
“all in all, it’s a very painful story
for retail,” he said.
Despite that, retail vacancy rates
won’t reach historic highs, said Cohen, adding that the same likely isn’t
true for multifamily, office and industrial markets.
■■ Who: Young Hong, president, Strategic Property associates/Strategic asset
Services (moderator); William Hughes,
senior vice president and managing
director, Marcus & Millichap Capital
Corp.; Thomas Kosonen, managing
director, Bear Stearns and Co. inc.;
Chris Kane, head of securitization and
loan closing, Bank of america/Merrill
■■ When: 2 to 3: 15 p.m., Feb. 10
■■ What: These panelists’ message was
clear — appraisals alone won’t deliver
adequate value estimates in today’s
market. Yes, lenders are looking at
cash flow, too. But another trend is
as Hughes pointed out, lenders
want to know everything possible
about borrowers’ worth and investment portfolios. Brokers who make
a strong case for their borrowers’
stability and motives stand a better
chance of closing loans.
To make an even-stronger case,
brokers should provide official proof
of everything, panelists said.
“it’s really [about] measuring down
to the nuts and bolts of the borrower
and the transaction,” said Hughes,
noting that 60-percent to 65-percent
loan-to-value ratios are considered
aggressive in a deleveraged market.
“[Lenders] want to drill down to a
warm body,” Young said. “[Borrowers]
better get used to making disclosures.
if they don’t like that, they don’t get
Hughes said that tenant diversity
can help strengthen projects on paper, especially in the retail arena.
Darrick Meneken is an associate editor at Scotsman Guide. Reach him at (800) 297-6061 or