SmithNovak
, as usual, delivered an excellent event. My especial thanks to
Bliss Morris
and
John Morris
for running one of the best panels.
So what were my key takeaways?
- Office, office, office. The only talking point that everyone could agree on is that office is worse than people think. It can't be repurposed to residential, most of it has ESG issues (60% in Dublin doesn't meet ESG requirements to be relet). But the first line of pain appears to be obfuscated by lending structures. If the banks are in, they are in the most secure level. Who is behind them and when will they start recognizing the pain? No agreement.
- Consumer points the way. Regardless of the efforts of banks to work with their retail customers, consumer secured and unsecured is building and expected to get worse. Worrisome in some countries, especially Southern Europe, while there has been improvements in resolution process issues, the goal posts are constantly shifting in terms of lenders' rights making modeling recoveries more challenging
- What elephant? No panel addressed/brain-stormed on the impact of the US presidential elections, the war in Ukraine, and the double whammy of a more aggressive but more economically challenged China. We are all just whistling by the graveyard. These "Known unknowns" could knock us all sideways
- ESG is going to hurt. The impact of ESG requirements is only fully being felt. As mentioned before, 60% of the office in Dublin could not be relet if vacant because they do not meet ESG requirements. Similar stories where told of the impact of ESG requirements on residential/office in France and Spain. Nothing like this has rolled out in the US, but I assume it is coming
- Where are the accounting firms? Of the traditional loan sale advisors, only
First Financial Network
and
Alpine Tremont LLC
were present. Historically, the accounting firms had fielded large teams from their portfolio sales teams, but few/none were present. This being said,
Kroll
made strong presentations on a number of panels including #litigationfinance and #valuation.
An open question to other participants, what did I miss?
Financial Services and Fintech Leader
1 年What’s the end game hypothesis for office? If space can’t be repurposed and in many cases can’t be relet without substantial capital improvements and there’s limited demand (at least at price points that would pay for the required improvements) - what happens to the buildings after the pain is felt?
Real Estate Lending | Commercial Real Estate and Hotels | Head of Origination | Banking | WIRES | AMMDE
1 年Great summary Gifford! The only thing that I would add would be the importance of the transformation of the Servicing industry. What has happened the las 10 years is completly different than what the next decade will bring. Are Servicers prepared? How will de M&A process in the industry reshape the landscape of what is to come? Are current fees competitive and sustainable? Great discussions were held in several panels about this!