Tuesday, September 20, 2011

Coming down from the summit

I attended Bisnow's Second Annual Real Estate Summit at the InterContinental Hotel this morning. It was a packed house, with a lot of familiar faces and some great speakers, including Steve Fifield, Mike Reschke, Gerry Nudo and the keynote speaker, Neil Bluhm. (Hearing Bluhm speak is a big deal to many of the real estate cognoscenti, because he does not appear as frequently on the scene as a Sam Zell or a Donald Trump, even though he is also a billionaire and every bit as savvy.)

What did I learn that I can pass on to you, along with my thoughts? (I am intentionally not attributing comments to any speaker here.)

  •  Several panelists don't see any turnaround here in commercial real estate until at least 2013. 
  • Lenders are dying to replaced paid off capital with new loans. I'm not seeing as much of that.  But I am seeing life that didn't exist before either.  I guess lenders and borrowers have different perspectives too.
  • If a bank is asking for more money or capital, it is probably to increase the bank's rating of the loan so it can retain fewer reserves with respect to that loan.
  • If your lender isn't calling you every week to do deals.... (Really?)
  • Somewhat contradictorily, lenders are looking for construction loans to do, but then they don't really want any risk on the deal over $25 million, and they also do not want to be participants in someone else's loan unless goodies can be spread around.
  • This is a once in a lifetime opportunity to do low interest, ten year deals with insurance companies, and you should do everything you can to get your LTV to a point where you can do those deals.  Moreover, when you need to discuss something to the lender someone is actually there who can listen.
  • CMBS spreads are not changing any time soon.
  • Casino financing can be difficult because many lenders do not understand the difference between local/regional casinos and Las Vegas.  Local operations are finite in terms of licensing and people go there like they would to a sporting event, while Vegas is an event, with virtually unlimited licensing and travel costs. That is why Vegas was hurt so bad in this recession.
Don't miss this one next year! This is one of the best real estate sessions I have attended.