Financing Notes

Our newest edition of Financing Notes is now available. In this edition, Jack Cohen discusses: - It’s a great time to be a borrower! - How artificially low interest rates drive property values – are bubbles forming? - Appropriate pricing of risk, and how risk tolerance can change with competitive pressure. - The fundamentals and core competencies – what changes in the search for yield? - Price deterioration and its destabilizing effect on capital. - The role of the Federal Reserve in interest rates and the effect on property values. - CMBS may be back, but is it different? Can it become a stable source of capital or continue its booms & busts? - And more…
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Work Ahead: Restoring a Robust CMBS Marketplace

As of six years ago, in commercial real estate finance, there is no question that CMBS had captured the lion share of the marketplace. When the financial crisis hit, CMBS was the first to go down. In fact, CMBS 1.0 is still in a world of hurt with its loans on distressed assets currently clogging special servicing and keeping the marketplace from resolving the problem. Leaders from across our industry seem to think that the way to deal with it is by denying involvement and dismissing it. We need to come together and acknowledge the mess we made.
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Inflation...What's REALLY Going On

Here’s what they are telling us…..Over the last 12 months, the Chicago area all items CPI-U increased 1.6 percent. The energy index rose 2.0 percent since last February, primarily due to price increases in gasoline. The all items less food and energy index was 1.2 percent higher over the year. Here's what we're actually experiencing…..
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Financing Notes

Our newest edition of Financing Notes is now available. Jack M. Cohen discusses: How investors must accept more risk for lower yields. The wall of maturities that are beginning this year, how will they be refinanced? EQUITY! The continued need to de-leverage which will take time to accomplish. Unemployment and geo-political factors will continue to cause uncertainty in the economy and hinder the recovery. CMBS will continue to strengthen, but may be three more years before it is over $100 billion. The best safeguard for our banking system is capital, capital, capital.
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State of the Capital Markets for 2011

At the beginning of the month, over 3,000 professionals from capital providers and mortgage banking firms descended on San Diego for the annual MBA-CREF convention. Guarded optimism prevailed with most people believing that the worst is behind us, values have bottomed and have started to recover, abundant capital exists for the “right deals” and interest rates are on the rise.
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Financing Notes

Our newest edition of Financing Notes is now available. Jack M. Cohen discusses: The ongoing capital distribution problem The availability of capital for trophy real estate and dearth of capital for everyone else Jobs! What effect they have on CRE The lasting impact of this economic cycle on CRE Political risk Surgery anyone? Who will be the first to take the remaining losses needed for everyone to move forward?
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Is the US headed toward our own “Lost Decade” like Japan?

Recently, I had the opportunity to have a conversation with Michael Murray with the Mortgage Bankers Association. We discussed how a job-less recovery could eventually lead to a loss of value in commercial real estate and what some possible outcomes may be for a return of a CMBS marketplace.
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Financial Reform That Misses The Point

On July 21, 2010, President Obama signed into law the Dodd-Frank Financial Reform Bill. The two questions that come to mind for me are “Can you legislate against greed or stupidity?” and, “If you could, why would you want to?”
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How do we get our heads out of the sand?

At 5:38am on Friday June 25th, Congress finished up their proposed legislation for Financial Reform. Since then, I have looked eagerly at what the media had to say about the efforts of Congress. I remain disappointed.
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How fragile is the nature of doing business today?

It occurs to me that everyone, naturally so, is in a hurry for things to return to “normal”. Funny thing, this “normal” thing. Who defines it? Is normal really the flow of business we experienced from 2004 to 2007? If not, then what is? And, how do we know given the “rose colored glasses” of normalcy we wear today? Can any of us truly give up our mental memory of the future?
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