Below are some observations and comments collected by me from formal and informal meetings, and random conversations though lunch on this second day of the 2011MBA-CREF Convention.

They do reflect my "coming up roses" word picture for ’11: we’ll have more roses blooming in the commercial real estate finance garden, but in ’11 we’ll still be dealing with the continuing bad or under performing product as well.

  • Technology: more signs that technology is changing commercial real estate –
    • Loan Servicing: Investment made by portfolio lenders and loan servicers in databases have been a huge help in assessing tenant-mix risk and in responding to tenant defaults.  This has been money well spent.
    • Loan Production and Underwriting: a next step in the use of technology will be the utilization, by commercial real estate lenders and servicers, of databases used by commercial lease brokers, who have built databases showing entire lease stacking plans (showing full lease terms) and debt payment terms covering buildings in specified markets; these tools will assist commercial lenders and investors in differentiating assets – and in making better investment decisions ("private is the new public").  
    • REO Management: increasingly, apartment rental rates and terms will use database-driven yield management tools, which allow apartment owners (and foreclosing lenders) to set apartment terms based upon "real time" market terms.  (One comment: 30-40% of all first-class apartment operators use this type of too.)
  • Market Share: CMBS – How deep is the CMBS investor market?
    • Life companies and hedge funds will only support annual new issuance of CMBS of no more than $100Billion
      Investors will fight for loan level information (at the time of securitization and during the entire term of the pool) ("private is the new public")
  • Market Share: Life Insurance Companies continue to "take back" market share "lost" to the CMBS loan market – How?
    • better pricing
    • better closing process (shorter loan documents, less structure, etc.)
    • focusing on "best" properties, in the "best" markets
    • let the 25+ CMBS lenders fight over the secondary properties

That’s it for now.  Off to lunch.

Please post your comments or questions below.