All-Star Panel to Address the Current Environment, Road to Recovery and Timing

Two years ago, CMBS BBB spreads stood at +85 basis points over swaps. Last year, spreads had blown out to the unimaginable level of +325 over swaps.  Now, these same spreads are quoted at +1125 (not a misprint) over and US CMBS activity is down more than 90%.  In each case, REIAC presented a timely debt panel that probed the causes and offered solutions to the growing crisis.

Our 3^rd Quarter 2008 program will explore the commercial debt markets, with a focus on quantifying the current environment, identifying the path to recovery and projecting the time required for a meaningful rebound.  To tackle this subject we have assembled an all-star panel of debt industry experts.  This REIAC debt forum will be the must-attend debt discussion of 2008 as it was in 2006 and 2007.

As most know, the 2007 subprime contagion quickly infected the commercial real estate debt world, and major disconnects developed in debt pricing and supply/demand balances.  With new paper largely unsellable, Wall Street firms and CMBS players dismantled previously high volume lending shops eradicating a major source of debt funding while traditional methods of debt grading lost the faith of investors.  Add to that, mounting woes at national lending stalwarts and hundreds of local and regional banks that dominate construction lending and the result is a commercial real estate debt market resembling a V-8 engine with only one functioning cylinder.  That good cylinder for the moment is mostly composed of major life companies and a few banks.  But with demand extreme and allocations limited, few borrowers are obtaining financing and even then, at elevated prices.

But the market will correct.  Significant capital exists and will ultimately move to fill the voids in the lending risk/return environment.  When it does, liquidity and pricing of mortgage paper should also improve.  Who will step up to lead this recovery and how will pricing efficiency and uniformity of risk ratings be restored?   Will Wall Street help by re-emerging as a major lending force, and if so, in what form and under what timeframe?  How will institutional capital sources behave given the breadth of profitable options that exist?  Can the debt needs of developers and investors be satiated, particularly given a rising need for refinancings?  When will the market hit bottom and how quickly will it recover?  And possibly the most pressing question, who is lending today - on what projects and under what terms?

To address these and other questions, REIAC has assembled a panel composed of business leaders from among the leading commercial real estate lenders, industry associations and rating agencies.  REIAC member and industry veteran Brian Olasov will lead our panel in this vibrant, candid and problem-solving oriented discussion.  This is an event you absolutely cannot afford to miss!  We look forward to seeing you on September 4^th.

Best Regards,

Jerry Monash

Gerald S. Monash, CCIM, President

Paul Berry

Paul A. Berry, Program Committee Chairman