Surprises in Capital Markets—Both Debt and Equity

NEW YORK CITY—Certain capital market trends have caught the attention of David Blatt, the CEO of CapStack Partners. The head of the New York-based specialty investment bank and investment advisor says from the debt standpoint, there are many alternative lenders. When financial institutions became more heavily regulated while the market was still recovering from the last recession, private debt funds and sources of capital began filling the vacuum created by the banks under the stricter regulations.

The loosening of regulations made it easier for these once more heavily restricted banks to lend money. Many people expected they would start to take back market share from the debt funds and private money lenders, simply because their capital would be cheaper and more competitive.

“But even with that, you are actually seeing more credit funds being raised and even more active alternative lenders,” Blatt continues. “It has actually gone the other way, which is certainly surprising on the debt side.”

On the equity side, Blatt points to the rise in more equity fund vehicles, which do not have the traditional, institutional, private equity profile. “These smaller funds are targeting the individual investors which is a hugely growing space. So, a person can’t go allocate a few hundred million dollars the way a pension fund could. But nonetheless, you’re seeing a lot of institutions making headway into that space and that area is also growing,” he says.

Blatt explains the reason is that individuals are much sticker investors. For example, imagine the market goes down in a particular asset class, such as real estate. Blatt says an institutional investor will pull their money out, turn their spigot of cash off when they don’t want to have exposure to real estate any longer.

“When an individual is invested in real estate or really anything, when the market goes down, most people just hang in there. They are much longer-term thinkers. They are not trying to pivot to move into another asset class in that institutional investor mindset type of way,” he comments. Blatt further notes vehicles have been created and tailored for these individuals. Plus, real estate has been brought to the forefront with these types of investments.

At the upcoming RealShare conference, CapStack’s CEO will further explore these observations and others—including capital market investments in real estate tech. He predicts blockchain will be a game changer, transforming title searches—almost comparable to traveling from medieval times to the future, in today’s real estate world. Who will be winners/? And whose jobs will be squeezed out?

As part of this event, he’ll delve into these topics and others during the panel discussion “Balance and Flexibility: Capital Markets Update.” Blatt will be joined by William Silverman, managing director and group head at Hodges Ward Elliot; John Harrington, founding partner of HKS Real Estate Advisors; Matt Galligan, president, real estate finance at CIT; and William P. Procida, founder of Procida Funding.

The RealShare New York 17th annual conference is scheduled for Tuesday, November 13 at the Yale Club, 50 Vanderbilt Ave. Registration will begin at 1:00 PM, with sessions through 5:30 PM, followed by a networking cocktail party. To register, click on REALSHARE NEW YORK.