12/02/2011

Attendance Rise Seen for January Conference

Despite the second-half swoon that crushed profits and sapped the morale of commercial MBS pros, turnout at the CRE Finance Council’s 13th annual January conference is on track to slightly exceed the level at last winter’s event.

The projected increase reflects the desire of industry players to gauge the tone of the real estate finance market and to compare notes on the state of the CMBS sector and where it is headed, said Stephen Renna, the trade group’s chief executive. It also helps that the gathering — one of the CMBS industry’s two big annual events — is returning to its longtime home in the upscale South Beach section of Miami Beach, after being held in Washington the past two years.

The mood will be less buoyant than a year ago, when optimism prevailed amid rising lender activity and improving market conditions. That optimism was dashed by the summer blowout in CMBS spreads, an event attributable more to fallout from global economic volatility than to any direct weakening in real estate fundamentals. But spreads have since receded somewhat, and the first-quarter issuance calendar has started to fill, providing hope that the market is getting back on track (see article on Page 1).

Attendance at the conference is a rough barometer of the sector’s health. Registrations peaked at 1,550 in 2007, when the real estate bubble was near its height. They slipped to 1,403 the following year and then plummeted to 706 in 2009, when the credit crunch was in full swing. Attendance rebounded to 1,120 in 2010 and to 1,215 early this year. Registrations at the upcoming conference are on track to top 1,300.

At the confab, scheduled for Jan. 9-11 at the Loews Miami Beach Hotel, lenders will try to assess the damage done by the latest market reversal and the degree to which competitors remain committed to the sector. Likewise, investors will attempt to get a handle on which Wall Street dealers will be actively trading CMBS going forward. Over the last few months, buysiders have complained about dealers cutting back on their traditional market-making activities.

“Everyone wants to know who the players are,” said the council’s immediate past president, Lisa Pendergast of Jefferies & Co. “Who’s in? Who’s out? Who can I rely on for a bid if I buy something at issuance?” Investors will also try to determine which investors will be active buyers — and potential trading partners.

Another hot topic will be the avalanche of securitized commercial mortgages that mature next year. Jefferies puts the total at $50 billion. Some $29 billion of the loans were written near the peak of the market, and many of those can’t be fully refinanced because of the plunge in property values.

The CRE Finance Council is soliciting a wider variety of market participants this time, as it ramps up a two-year effort to move beyond its original core membership of CMBS lenders, servicers and investors. For example, the trade group has distributed more than 200 free passes — far more than ever before — to portfolio lenders, multi-family lenders, distressed-debt buyers and others. That expansion in scope reflects the fact that the market crash took a big toll on the CMBS sector.

The council has also revamped and put a greater emphasis on its six forum groups, which target specific areas of commercial real estate finance. The forums serve securitization issuers, CMBS investors, high-yield-debt investors, portfolio lenders, multi-family lenders and servicers.

“They are going to be the reason why someone such as a portfolio lender says, ‘That association exists for me as much as it does for anyone else in the commercial real estate finance marketplace,’ ” Renna said.

While the securitization-issuer forum remains the largest, the high-yield-debt group is growing the fastest, with about 90 members since it was created in June. They include distressed debt buyers, mortgage servicers, workout specialists, loan-sale advisors and specialty lenders. Many of them previously either skipped the conference or went to the venue but gathered on their own.

“This is the first time inside the tent for many of these people,” said that forum’s chairman, Bill O’Connor of law firm Crowell & Moring. He noted that many distressed-debt buyers, especially those at smaller shops, will likely use the conference to learn more about servicers and borrowers they might be unable to find or reach on their own.

Members of the servicers forum, meanwhile, will talk about their efforts to improve or establish servicing standards. That group will also discuss an initiative with Trepp to provide benchmarks for valuing commercial mortgage servicing rights, said forum chairwoman Erin Stafford, co-head of CMBS at DBRS.

The projected attendance of 1,300-plus is based on 834 actual registrations so far. The fees are the same as last time: $1,350 for council members and $1,950 for non-members until Dec. 21. After that, the fee to register at the door will be $1,450 for members and $2,150 for non-members.

After holding the January confab in Florida for 10 years, the trade group moved it to Washington in 2010. The change reflected the growing financial role played by the federal government in the wake of the market crash. It also reflected sensitivity to avoiding the appearance of participating in junkets amid federal bailouts.

But the association decided early this year that the time was right to return to Miami Beach. With the commercial mortgage market reviving, the trade group felt attendees had shifted their attention toward efforts to bring in new business, putting a premium on the need to host parties and private dinners. South Beach is deemed far better-suited for that purpose, with its swanky restaurants and abundant night life.

That decision is not universally endorsed. One CMBS chief grumbled that the summer market reversal — which occurred well after the return to Miami Beach was determined — pinched his company too much to justify sending numerous staffers to such a luxurious venue. But if the association’s attendance projection proves accurate, the move to Miami Beach appears to be a net plus.

The trade group also holds an annual June conference, which is the CMBS industry’s other major gathering. That event has traditionally been held in New York, but will switch to Washington next year — a nod to the fact that regulatory developments continue to play an important role in the industry.

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