February 9, 2010 2:59 PM
Over 1,800 mortgage bankers and lenders attended the Mortgage Bankers Association CREF Convention and Expo this week in Las Vegas. While discussion at the conference focused mostly on financing of multifamily dwellings, lenders also discussed the business climate for other types of commercial lending. Most commercial lenders were looking for stable, fully-leased properties from strong businesses. Lenders were most interested in office, industrial, and self-storage properties -- about which they were cautiously optimistic -- and had little interest in retail and hospitality businesses.
Economists at the conference said that the recession had ended in August 2009. They noted that single family homes had troughed in value during the first quarter of 2009. Now home values have risen 10 percent from that low point. Commercial real estate values, though, peaked in 2007. Commercial real estate values are still 31 percent lower than they were at their 2007 peak. Economists further predicted that commercial real estate values will continue to drop at least another four percent. Retail leasing, in particular, is expected to trough in 2010. But a retail rebound is expected to occur as well, at some point during the year.
Experts in the real estate industry made other predictions as well. They expected that delinquencies would continue to rise, especially in the hospitality industry and in over-leveraged multifamily buildings, retail, and office. Because so many properties financed in 2006 and 2007 were overleveraged, economists expected that deleveraging would take place over the next few years. Lenders will have to write off some losses and property-owners will commit more equity to their properties. There will be little new construction.
The CREF Convention and Expo took place from February 1 to 4 at the Mandalay Bay Resort and Casino. It is the largest commercial real estate finance industry convention in the United States, and is attended by mortgage bankers, real estate investment officers of life insurance companies, commercial banks, savings banks, credit corporations and other lenders; pension fund advisors and investment banks; structured finance companies Fannie Mae and Freddie Mac; multifamily sellers and servicers and FHA-approved multifamily mortgagees and Ginnie Mae issuers; commercial and multifamily real estate loan originators, administrators, secondary market executives and professionals, and other parties who are interested in commercial and multifamily real estate finance.
The Mortgage Bankers Association's next several conferences include:
- the National Mortgage Servicing Conference & Expo, at the Manchester Grand Hyatt in San Diego, from February 23-26;
- the MBA Repurchase Workshop, at the Embassy Suites Dallas - DFW Airport Outdoor World in Grapevine, Texas, on March 9;
- the National Policy Conference, at the Hyatt Regency Washington on Capitol Hill in Washington, D.C., from April 13-14;
- the National Technology in Mortgage Banking Conference & Expo, at the Hyatt Regency Chicago from April 25-28;
- the National Fraud Issues Conference, at the Hyatt Regency Chicago from April 25-28;
- the Legal Issues/Regulatory Compliance Conference, at the Hotel Del Coronado in Coronado, CA, from May 2-5; and
- the Commercial/Multifamily Servicing and Technology Conference, at the Sheraton New York Hotel & Towers in New York, NY from May 23-26.