South Beach

MIAMI—The CRE Finance Council‘s January 2014 Conference was wall to wall with commercial real estate professionals looking for insight into the state of the finance industry. The conference, which promised to address the most relevant topics facing the industry today and presented by recognized finance leaders, did not disappoint.

After a continental networking breakfast at the famous Fontainebleau Hotel in Miami Beach, attendees flooded into the opening session with keynote speakers Jonathan Pollack, managing director for Deutsche Bank and Steve Witkoff, CEO of The Witkoff Group. That was followed by a panel entitled, “Best Investment Ideas: High Yield, Investment-Grade, Direct Property.”

Panelists, including representatives from Hines, NorthStar Realty Finance Corp., American Realty Capital, and Hartford Investment Management Co., discussed how big the opportunity is for 2016 and 2017. They also tackled the rush to find debt deals, the retail market for private assets, and how far they are willing to go for yield.

A separate panel entitled, “Balance Sheet Lenders: Buy and Hope?” featured leaders from Bank of America Merrill Lynch, PNC Real Estate, KeyBank Real Estate Capital, and JP Morgan. The topic: CMBS came roaring back in 2013, but the biggest lending source by far continues to be the commercial banking system. The panel discussed what a bankable loan looks like in today’s market, whether banks are competing with CMBS for credits, if regulators and Dodd-Frank are making commercial real estate lending less attractive for portfolios, and the credit flow to deserving projects in secondary markets.

Commercial real estate finance industry participants are watching for market reaction as the Fed begins its tapering program of government bond purchases,” says CREFC president and CEO Stephen M. Renna. “The consensus among CREFC members is that interest rates will move modestly higher in 2014. As long as the rate increase is gradual and correlates to growth in the economy, the market should be able to absorb it. It’s the sudden rate increases resulting from capital market dislocation, such as a debt ceiling crisis, that are most problematic.”

Billy Beane, the general manager for the Oakland Athletics, offered a keynote during a lunch sponsored by Credit Suisse before an afternoon session entitled, “Hot Topics: Things You Need to Know.” That panel featured executives from PNC Real Estate, Square Mile Capital Management, Deutsche Bank, and Lone Star US Acquisitions. Other panels included “Choosing a Lender: Just Hooking Up or A Long Term Commitment?,” “Capital Market Lenders: Buy or Goodbye?”, “Servicers Roundtable,” and “CMBX: The Long and Short of It.”

The bottom line according to Nicoletta Kotsianas, associate director of Kroll Bond Rating Agency and co-editor of CRE Finance World is clear. She says, “All eyes are on interest rates and underwriting as the calendar turns to 2014.”