South Beach

MIAMI-The CRE Finance Council‘s January 2013 Conference was packed out with commercial real estate professionals looking for in-depth insights from some of the most respected names in the finance industry. And they weren’t disappointed.

After a continental networking breakfast at Lowes Miami Beach Hotel, attendees flooded into the a roundtable discussion on market issues and opportunities followed by a panel entitled “Reconstructing Servicing to the New World Order.”

Panelists, including representatives from Wells Fargo, Eastate/Midland Loan Services, TriMont Real Estate Advisors, Cohen Financial and Berkadia Commercial Mortgage, discussed how they are adjusting to what many have called the “melting ice cube.” They also offered insights on how judicial and regulatory concerns will impact their specific business strategies going forward.

A separate panel entitled, “Relative Value—How does CRE Stack UP to the Other Asset Classes?” featured leaders from Prudential Mortgage Capital Group, MetLife, AllState Investments, Wells Fargo, and Rialto Capital Management. The panel discussed the CMBS market, risk preferences in commercial real estate, and the impact of interest rates, risk and inflation.

Discussions of CMBS strategies varied from looking at deals on a case by case basis to determine if CMBS was a viable option to largely leaving CMBS out of the funding equation in favor of private lending. The discussion soon turned to how success is measured. Panelists described various factors, including Return on Equity models, asset values, client acquisition and retention, portfolio income rather the production, and cash on cash returns. One panelist said, “It’s gotta be black, not red.”

Governor Jeb Bush offered a keynote in a lunch closed to the media before a panel on “Hot Topics” in the Industry convened in the afternoon. Panelists identified the issues they are most concerned about as low cap rates, low interest rates, and CMBS maturities.

“The economic climate today feels a lot better than it did a year ago,” one panelist said. “We’re keeping our eye on the impact of interest rates. When they move, they will move. We are also wrestling with opportunities in secondary cities.”

An afternoon session entitled “Mezzanine Investment: Gap Financing for a Capital Impaired Environment” featured executives from Talmage, Brookfield Real Estate Financial Partners, Ares Management, Macquarie Bank and Apollo Global Management. Panelists discussed the best mezzanine opportunities right now and what borrowers  expect to pay compared to what lenders expect to earn.

Although high interest rates curbed the appetite for mezzanine loans over the past decade, that’s beginning to change as lower rates hold steady. Mezzanine lenders are generally looking for well-structured transactions with strong sponsorship and interesting financing transactions across a wide range of commercial property types and geographies.

Other panels included discussions on the state of non-traditional CMBS and controlling class warfare.  In between panels, plenty of the conference offered plenty of networking opportunities, including an after hours poolside reception. The conference wraps up Wednesday morning with panels on the outlook for bank portfolio lending, a government relations update, and a board of governor’s meeting.