Atlantic Conference The Market Environment Challenges and Opportunities July 14, 2010 Bill Monagle,...
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Transcript of Atlantic Conference The Market Environment Challenges and Opportunities July 14, 2010 Bill Monagle,...
Atlantic ConferenceThe Market EnvironmentChallenges and OpportunitiesJuly 14, 2010
Bill Monagle, Partner and Senior Strategist
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– Sub-Prime Mortgages• Residential
– Structured Credit
– Real Estate• Commercial• Residential
– Financial Institutions• Bank Failures
Macro Events - Debt
Commercial Mortgage Backed Securities - Issuance
Source: Commercial Mortgage Alert – CRE Finance Council
U.S. CMBS Issuance and U.S. Commercial Real Estate Sales are Correlated
Source: Commercial Mortgage Alert – Real Capital Analytics – CRE Finance Council
U.S. Commercial Real Estate Sales are Down and Cap Rates are Rising
Source: Real Capital Analytics – CRE Finance Council
U.S. CMBS Delinquencies Quarterly by Property Type
Source: Trepp LLC – CRE Finance Council
Comparison of Architects Billings (ARCHWOTB) and Inquiry (ARCHINQU) Indices
Source: Bloomberg - AIA
Real Estate - Commercial RE Loans Coming Due
Year ofMaturity $ % of Total Total Banks CMBS Life Cos Other
2010 $96 35.6% $270 $153 $46 $18 $532011 $144 48.5% $297 $166 $56 $18 $572012 $193 63.1% $306 $172 $55 $19 $602013 $184 60.5% $304 $163 $64 $20 $572014 $252 94.7% $266 $130 $67 $19 $50
Totals $869 60.2% $1,443 $784 $288 $94 $277
Projected Commercial Mortgage Maturities and Holders of the MortgagesSource: Foresight Analytics, a unit of Trepp LLC
($ in billions)
Mortgages ExceedingProperty Values
U.S. Bank Failures are Rising
Source: Real Capital Analytics – CRE Finance Council
• It is important to note the following characteristics of many non-traditional investment strategies including hedge funds, real estate and private equity:
– Performance can be volatile and investors could lose all or a substantial portion of their investment
– Leverage and other speculative practices may increase the risk of loss– These investments can be highly illiquid, and investors may be subject to
lock-ups or lengthy redemption terms. There are no secondary markets for investors’ interests in hedge fund partnerships
– Managers are not required to provide periodic pricing information to investors
– These funds may involve complex tax structures and delays in distributing important tax information
– These funds are not subject to the same regulatory requirements as registered investment vehicles
– Fees are typically high– Trades executed for a hedge fund may take place on foreign exchanges– Limited partnership agreements often give the hedge fund manager
authority to trade in securities, markets or currencies that are not within the manager’s realm of expertise or contemplated investment strategies
Alternative Investment Disclosures