IPD Conference: Unfinished Business Hampers Cap Markets’ Rebound via CPExecutive.com

Real estate capital markets present a mixed bag of promise and unresolved issues left over from the Great Recession, according to the leading economists, analysts and financiers who spoke at a forum sponsored by IPD in New York City.

Bob White, president of Real Capital Analytics, projected that transaction volume could reach $300 billion this year, representing a 50 percent gain over 2011 volume. Much of that growth will take place in the second half of the year, as the market gradually returns from the slowdown during the second half of 2011.

According to Brian Valenti, a senior analyst for the Federal Reserve, “2012 will be interesting for special servicers.” Data offered by other speakers bolstered that prediction. Bill Looney, president of Debt X, predicted that distressed asset sales will reach $100 billion this year, up from $80 billion in 2011.

One concern is the volume of problem loans held by small commercial banks. Commercial real estate makes up 28 percent of their assets nationally, and many of those assets represent unresolved distress. “Five years into it, we still haven’t shed a lot of these assets,” noted Mark Eppli, professor of finance at Marquette University. Refinancing will be a particular problem for 5-year floating rate loans issued during the peak of the market in 2007 that are maturing. The next 12 to 18 months present a window of opportunity “to get things right,” Eppli added.

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