Activity Begins to Pick Up for Yearend

Activity is beginning to pick up for the second half of the year, after the capital markets saw a slower than expected 1H17. According to Shlomi Ronen, managing principal at Dekel Capital, the performance in the first half of the year was slower then expected; however, all of that is beginning to change as summer activity is expected to drive transaction volumes up through the end of the year. To find out more, we sat down with Ronen for an exclusive interview.

GlobeSt.com: Tell me about the activity in the first half of the year, and how it stacked up against your expectations?

Ronen: My initial expectation is that we would see a lot more activity in the beginning of the year. With all of the talk of the big wave of maturities hitting this year from CMBS, I really expected that to start creating a lot more transactions. We are starting to see some of that now, but I did expect a lot more of those deals to drive transactions. In terms of where our clients are focused, it seems like there is a lot of focus on buying deals with some sort of downside protections, like with existing cash flow in place or doing a lighter renovation. Investors are being cognizant of where we are in the cycle and want to take some risk off the table while continuing to do deals. On the capital side, our expectations coming into the year were that we would have a broad base of capital transacting, and that was the case. We have seen good amounts of capital available in all sectors and all product types. We did a few land financing deals this year, and we were surprised at how much capital was in the land financing space now versus a year ago.

GlobeSt.com: How did the first half of the year compare to the first half of 2016?

Ronen: In the first half of last year, we saw the global bond market hiccup and create issues in the securitized world. We also dealt with new regulations and other things being implemented. This year, we have had good consistent capital available across the board. It has really been non events this year on the capital side.

GlobeSt.com: We also saw a major shift in administrations at the beginning of the year? Did the change in government contribute to the slow transaction volume?

Ronen: That change probably did contribute to the slowness in the first half of the year, but people are still optimistic. Now that people are seeing the lack of execution in Washington on a number of different fronts, they are getting more comfortable to transact with the expectation that things aren't going to change as drastically as was originally publicized by the administration. There seems to be enough focus on pulling back from the financial regulation that I think we will see something in that regard, but it takes time in Washington to get things done.

GlobeSt.com: What is your outlook for the reminder of the year?

Ronen: In think we will have a good rest of the year, and I am hoping that the current increase in activity that we are seeing will serve as a catalyst for the rest of the year. I think that we will see a strong second half if the year in terms of transaction volume. On the deals that we are currently working on, we are also out raising equity, and we are speaking to a wide swath of private equity funds. There seems to be a lot of activity across the board to invest capital.

GlobeSt.com: Is that capital flowing to any specific asset types?

Ronen: I think there is, with the exception of retail, which is still lagging, there is generally appetite across all asset classes. When you look at retail, the investor really needs to understand what type of retail it is. For certain retail assets, there seems to be consistent appetite.

Activity is beginning to pick up for the second half of the year, after the capital markets saw a slower than expected 1H17. According to Shlomi Ronen, managing principal at Dekel Capital, the performance in the first half of the year was slower then expected; however, all of that is beginning to change as summer activity is expected to drive transaction volumes up through the end of the year. To find out more, we sat down with Ronen for an exclusive interview.

GlobeSt.com: Tell me about the activity in the first half of the year, and how it stacked up against your expectations?

Ronen: My initial expectation is that we would see a lot more activity in the beginning of the year. With all of the talk of the big wave of maturities hitting this year from CMBS, I really expected that to start creating a lot more transactions. We are starting to see some of that now, but I did expect a lot more of those deals to drive transactions. In terms of where our clients are focused, it seems like there is a lot of focus on buying deals with some sort of downside protections, like with existing cash flow in place or doing a lighter renovation. Investors are being cognizant of where we are in the cycle and want to take some risk off the table while continuing to do deals. On the capital side, our expectations coming into the year were that we would have a broad base of capital transacting, and that was the case. We have seen good amounts of capital available in all sectors and all product types. We did a few land financing deals this year, and we were surprised at how much capital was in the land financing space now versus a year ago.

GlobeSt.com: How did the first half of the year compare to the first half of 2016?

Ronen: In the first half of last year, we saw the global bond market hiccup and create issues in the securitized world. We also dealt with new regulations and other things being implemented. This year, we have had good consistent capital available across the board. It has really been non events this year on the capital side.

GlobeSt.com: We also saw a major shift in administrations at the beginning of the year? Did the change in government contribute to the slow transaction volume?

Ronen: That change probably did contribute to the slowness in the first half of the year, but people are still optimistic. Now that people are seeing the lack of execution in Washington on a number of different fronts, they are getting more comfortable to transact with the expectation that things aren't going to change as drastically as was originally publicized by the administration. There seems to be enough focus on pulling back from the financial regulation that I think we will see something in that regard, but it takes time in Washington to get things done.

GlobeSt.com: What is your outlook for the reminder of the year?

Ronen: In think we will have a good rest of the year, and I am hoping that the current increase in activity that we are seeing will serve as a catalyst for the rest of the year. I think that we will see a strong second half if the year in terms of transaction volume. On the deals that we are currently working on, we are also out raising equity, and we are speaking to a wide swath of private equity funds. There seems to be a lot of activity across the board to invest capital.

GlobeSt.com: Is that capital flowing to any specific asset types?

Ronen: I think there is, with the exception of retail, which is still lagging, there is generally appetite across all asset classes. When you look at retail, the investor really needs to understand what type of retail it is. For certain retail assets, there seems to be consistent appetite.