2011 Capital Market Place Conference at Chelsea Pier 60

New York City's Chelsea Pier 60 was the site of this year's ICSC and NAIOP sponsored Capital Market Place Conference. The conference was attended by real estate owners, lenders and investors from across the country. The conference focused on the current economy and market outlook for commercial real estate. In addition, the conference concentrated on current views from an executive suite perspective, the changing debt landscape, structured finance and joint ventures, investment funds and current issues in Commercial Mortgage Backed Securities (CMBS) maturing debt and loan sales. Peter Linneman, Ph.D. moderated the executive suite discussion. Dr. Linneman, in addition to being a principal in Linneman Associates, is a professor of Real Estate, Finance and Business Public Policy at the Wharton School of Business at the University of Pennsylvania. Kenneth Bernstein from Acadia Realty Trust along with Alex Klatskin of Forsgate Industrial Partners, Jeffrey Olsen from Equity One and Scott Rechler of RXR Realty discussed deal flow and assessed providers of capital. Some panel members believe that commercial real estate has found a bottom, while others contend the market is bifurcated. New York City, Washington D.C. and Miami on the east coast along with San Francisco and Los Angeles on the west coast portray quite a different picture than the rest of the country. Shawn Rosenthal, principal of The Ackman Ziff Real Estate Group in New York City moderated the changing debt landscape segment. Jeff Fastoff from Credit Suisse, David Gray of DRA Advisors, LLC, Jeffrey Wiseman of Macquarie Capital along with Timothy McGinnis from New York Life Investment Management discussed parameters for permanent, bridge and construction lending heading into 2012. Fastoff commented that CMBS has had stress in the current market and that pricing is choppy with spreads ranging from 130 basis points over swaps to 300 basis points over. Wiseman reiterated the struggles surrounding risk assessment of exit strategies. McGinnis remarked that life companies are holding up well and continue to view commercial real estate as an attractive investment. Commercial real estate yield average 100 to 200 basis points higher than corporate bonds. Gray was surprised at the quick resurgence of CMBS in the beginning of 2011. Gray pointed out the relative ease of completing CMBS transactions earlier in the year and the difficulty surrounding CMBS over the last few months. Are we now experiencing CMBS 3.0? Timothy Zietara, senior vice president and portfolio manager for Torchlight Investors (formerly known as ING Clarion Capital), moderated the structured finance discussion at the conference. Zietara also is an adjunct professor at New York University. Zietara was joined by John Garth of Pembrook Capital, Christopher Linkas of Fortress Investment Group, George Perry of Malkin Investments, LLC and Brad Wildauer from AREA Property Partners. The panelist discussed the role opportunity funds, investment funds and mezzanine funds have in the current commercial real estate marketplace. The focus of several panelists centered on deals in the largest MSAs. One panelist stated, "I would rather do one deal in New York City than ten deals in Pittsburgh." Other panelists suggested that yields are to be found in other areas such as multifamily properties in Texas. Mezzanine rates are ranging from 12-15% for office properties in strong markets and 9-12% for multifamily. Based on the tone of the panelists, I doubt very much if institutional mezzanine money will find its way into Upstate New York. Following the previous conference subjects, discussions concerning Joint Venture strategies, Investment Fund strategies and CMBS loan servicing took place The well attended conference may be summarized by stating that there is strength and plenty of capital available in certain markets. For the most part, these represent the top 6-7 of the nation's MSAs. Smaller markets, such as Upstate New York, probably will not benefit from major investments by institutional players. Smaller market will continue to rely on local and regional banks, life insurance companies and the agencies for multifamily product. Sam Berns is senior vice president and managing director for NorthMarq, Rochester, N.Y.