CREFC Conference 2022 Highlights
The CRE Finance Council (CREFC) returned to its live format in Miami at the Loews Miami Beach Hotel January 9th-12th after hosting the conference virtually in 2020. While the attendance was not on par with pre-pandemic levels, there was optimism for the commercial real estate space in 2022 following a very robust 2021.
- More supply of debt than capital demand. Rising interest rates will be mitigated in part of the tightening of spreads due to abundant capital.
- There is pent-up demand for travel which bodes well for hotels. Consumers have money to spend and the balance sheets of American families are at an all-time high.
- Floating rate debt will start to look more attractive for those investors that are yield-driven.
- Capital markets are a “flow business”. Engage with experts that know where the allocations are and who are the “hot lenders”.
- Lenders generally chase people vs deals, so this continues to be a relationship business. Talent shortages in the industry is magnifying this trend and forcing lenders to look at larger deals to meet allocation goals.
- The hybrid work environment is here to stay which will put pressure on the office market. There is a flight to quality in major markets in hopes of creating work environments that encourage workers to come into the office.
- Industrial/logistics continue to be very strong with capital continuing to chase this product type.
- In the Multi-family space, Life Companies should benefit as the Agencies stay focused on mission business – especially the Class A properties.
- Debt Funds and regional banks will continue to grow market share.
- Conduits will continue to struggle with certainty of execution and servicing issues.
- On the policy and political front: 2021 was the year of legislation and 2022 will be the year of regulation; a divided government will reduce legislative risk – “no scary tax reform”.
- Climate will be a top priority for President Biden and he will need to go the regulatory route. Climate risk will be tied to “financial stability” with the banks and SEC seeking data collection and transparency initiatives. Capital providers will be collecting climate risk data in underwriting and annual reporting.