Report from the Western States Conference

October 2, 2013

The California Mortgage Bankers Association held its Western States conference in Las Vegas last week. It was very active this year, with a palpable buzz in the air. There were a couple of significant developments that stood out after participating in the event. Attendance is usually limited to west coast based bankers, insurance companies, and mortgage brokers, but this year there was a significant presence of east coast investment bankers and conduit lenders, indicating a major uptick in market liquidity.

The general sentiment was that the loan market is in full swing. Lenders are gearing up for year-end push, and laying groundwork to meet aggressive goals for 2014. As part of this push, lending institutions are looking at alternative ways to get money out—many have started bridge programs to feed into their permanent lending platforms. Typically this space was reserved for deals sizes north of $30MM, but some have branched out into looking at deals from $15MM and up. With activity at full tilt across all the lending segments, there is no lack of money to finance any quality of real estate transaction.

Stabilization in the CMBS space is gaining momentum and spreads have come in accordingly. Competition within this space is growing, resulting in tightened spreads, which is also pushing underwriting back to more competitive levels.

Many of the conversations I had during the western states conference centered around the impact that the increase in liquidity would have on borrowers. Liquidity is a good thing of course, but with the rush of various institutions into the commercial space comes a more complex landscape. Borrowers have more options—which gives rise to competition and more attractive terms—it’s discerning which opportunity has the most relevance and long-term benefit to each individual that becomes more difficult.

Dan Friedeberg, President