Subprime Meltdown
You didn't need to be a rocket scientist to see the subprime meltdown coming, said Daniel Hurwitz, president/CEO of Developers Diversified Realty, from his seat on a panel discussing capital markets at the Urban Land Institute's fall meeting in Las Vegas on Wednesday.
"We had a fee-driven lending industry that didn't care about credit," he said. Their way around it was to package and sell the debt to somebody else would then repackage it and sell it again. "It was the financial institutions' hot potato," he said. "Whoever got stuck with it last...."
The recoil by lenders, whose debt drives deals, has slowed deal flow, said Ron Sturzenegger, head of real estate and lodging for Banc of America Securities LLC. "We still have more capital and more liquidity than we've ever had in most of our careers," Sturzenegger said. "What we have now is a debt problem; the grease that spins the wheels is on hold."
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