"A 70% deal is going to be considered a sweet deal," John Tomlison, senior vice president of Wells Fargo & Co., remarked during a discussion on finding clarity in capital markets. He added that any real estate transaction should be "as pure as ivory snow" before being taken to bankers now.
The crowd of more than 200 in attendance at the Gaylord Palms Convention Center heard various comparisons between current and past market downturns, particularly the early 1990s when the Resolution Trust Corp. was formed to take over failing savings-and-loans. While this week's $250-billion federal investment into the nation's banking system was designed to prevent a similar collapse, some panelists expressed that it may not have much impact in freeing up credit for larger real estate transactions.
"There's a difference between the ability to lend and the willingness to lend," said Andy Toxey, senior vice president with Regions Bank. He added that banks would rather not carry billions of dollars worth of foreclosed real estate assets on their books, as was the case during the RTC days.
Panelists agreed that the depressed property market creates new buying opportunities for institutional investors that have held off over the last few years. However, they caution that now might not be the right time to make a move since there is still uncertainty over whether the downturn has indeed hit bottom.
"Finding the right numbers is the challenge," Moses Salcido, senior development manager for Panattoni Development Co., said during a Town Hall Meeting on the state of the Central Florida market. "Maybe in the next six months to six years they will start to surface."
Seth Werner, chairman and CEO of Cypress Creek Capital, says he believes investors can now take advantage of unprecedented opportunities for commercial real estate throughout Florida, as in past down cycles. "The biggest difference I see is that we have more cash sitting on the sidelines right now than we have ever had before," he said.
Keynote speaker Jack Kemp, a former HUD secretary and presidential candidate, offered his own encouragement to those in attendance. He pointed out that conditions aren't as bad now as the early 1980s, when national unemployment and the federal funds rate were both in double digits.
"We're going to come through this and come out even stronger. Entrepreneurial capitalism is still the greatest system mankind has ever known," Kemp told the audience, which responded with a standing ovation.
The RealShare Conference Series is produced by Incisive Media, which also publishes GlobeSt.com, Real Estate Florida and Real Estate Forum. This was the conference's second year in Central Florida.
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