Lending Crisis To Worsen Before It Gets Better

NEW YORK CITY-Traditional capital for real estate has dried up in the past year, and although panelists at Incisive Media’s second annual RealShare Investment and Finance Summit were relatively optimistic about the future of the current credit void, they agree that it will get worse before it gets better.

In a near-stagnant investment sales year, except for a flurry of activity in some sections, panelists on both morning power sessions, say that things will return to normal, it is just a matter of when, and who is left standing in the end.

Investor panel

“There will be opportunity eventually, but the crisis is far from over,” said Michael Fascitelli, president and trustee of Vornado Realty Trust, in the Investor Power Panel, first session of the day. Fascitelli joined moderator Steve Pumper, executive managing director of Transwestern, as well as panelists including: Trevor Michael, managing director of real estate acquisitions at TIAA-CREF; Stephen Quazzo, CEO of Transwestern Investment Co.; Michael Katz, co-CEO at Sterling American Property Inc; and Robert Underhill, managing director and capital transactions group head at Shorenstein Properties LLC.

Panelists agreed that the investment market today is not a pretty site, pointing to less velocity, and fewer transactions. However, some noted that pricing hasn’t come down as much as expected. Fascitelli, for example, said that as far as “getting back into the water,” it is important to be “cautious” for the next two to three years.

“Private equity pricing has been sticky and slow to react,” Underhill said. He later explains that “there seems to be a fair bit of denial,” explaining that it isn’t just a cycle, it is more systematic, more global and more synchronized.