With the capital markets in flux, attendees have a laundry list of topics they want to discuss.
MINNEAPOLIS, MINNESOTA (February 14, 2023) – MBA’s mortgage and commercial finance convention and show kicked off this Sunday and more than ever, given the current market environment, attendees are eager to hear what their colleagues have to say about a laundry list of issues. GlobeSt.com is there and we hope you will return to our site to see what we have covered. In the meantime, we have caught up with several people going to the event in San Diego to see what they expect to get out of the conference this year.
Undaunted by the economic uncertainty, Jeffrey Ketron, Senior Vice President at Northmarq tells us that he is expecting to see and hear a good bit of optimism, peppered with some somber realism, similar to what he saw at NMHC last week. “People in this marketplace are always excited to get back together because it is a ‘people business’, to hear what is happening in different markets from those players, discuss where property values have gone and may be headed, how cap rates have widened affecting the investment sales space, and how large of a player will the Agencies be in the multifamily finance space.”
This is what he believes will be discussed: How office markets, particularly the larger ones, are starting to show signs of coming back as workers are being encouraged to return to the office, retail sales have reportedly slowed which leads to challenges in the shopping center sector, but industrial and self-storage reportedly continue to perform very well. “Regarding multifamily, which is our team’s focus, we’re always excited to have opportunities to engage with our partners from Fannie Mae and Freddie Mac; at CREF, we’re able to both to take part in their larger DUS and Optigo meetings to hear about their goals and initiatives for 2023, and then have individual team meetings with each Agency to lay out our goals for 2023 and plan how we at Northmarq can move quickly to fit into their wider 2023 objectives to remain an important player in the multifamily finance space.”
Ketron’s colleague, John Bradshaw, Executive Vice President/Regional Managing Director at Northmarq, is also attending and he reports his team is looking forward to CREF 2023 this year more than typical. “We are at a pivotal time in the capital markets,” he notes. “The Fed’s battle with inflation and the related inverted yield curve results in lots of market uncertainty and challenges. Though we keep in pretty good touch with our capital sources all the time, CREF gives us a chance to hear from many sources in a couple of days. And it is often a time when lenders announce programmatic changes.”
Some specific things Bradshaw and his team are looking for this year include lenders’ prepay flexibility on shorter term deals, potential for spread compression, outliers willing to enter the office space with high quality rent rolls, and their attitudes regarding portfolio refi’s that have underwriting challenges at these higher rates. “We expect our agency partners to confirm their well-defined multi-family missions, life companies to continue to deploy lots of capital by finding favorable risk to yield relationships, banks to be flat because of regulatory oversight, and all participants trying to figure out what comes next.”
Ben Kadish, president and founder of Maverick Commercial Mortgage is also going to receive valuable market intel directly from the lenders. “The sudden and significant rise in interest rates brought the commercial mortgage market to a screeching halt in 2022. The lenders provide us with their latest underwriting parameters which allow us to distribute that information back to our developer clients in our local and regional markets.” For example, Kadish points out that many lenders are bringing to market new products such as preferred equity to lower the first mortgage leverage on the hundreds of new apartments built across the country in 2019-2022. “With cap rates going up as a direct correlation to interest rates, all of these projects will need to be refinanced with a new capital stack, or sold in the next 18 months as the construction and bridge loans mature,” he says. “This will be a catalyst for more deals closing.”
It’s not just knowledge building that attendees expect but also networking as well. For Charles Krawitz, Chief Capital Markets Officer at Alliant Credit Union, the MBA CREF conference offers the opportunity to not only connect with intermediaries, but with other lenders and a wide assortment of professionals who live and breathe commercial real estate finance, he says. “The conference provides a forum to share and learn while developing and deepening relationships. We source loans exclusively through financial intermediaries, and the MBA CREF Conference provides us with the ability to meet with commercial mortgage bankers and brokers from across the country in one place. On top of this, the MBA CREF draws private lenders that specialize in bridge and construction loans.” Krawitz says Alliant Credit Union regularly partners with such lenders and the conference provides a setting where he can strategize with many of the firm’s long-standing relationships and explore opportunities with new partners. “While rate volatility will likely make 2023 a wild ride, there are many areas of opportunity to explore—and the place to begin is the MBA CREF,” he says.