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'Light Around the Bend' for Industry

NEW YORK CITY-Panelists at Friday's capital markets conference discussed both the industry's progress since the post-Lehman paralysis and the enormous challenges that remain.

By Paul Bubny | Updated on February 01, 2010

NEW YORK CITY-Compared to the dark road ahead that confronted the industry following the capital markets collapse in the fall of 2008, today “we see some light around the bend,” said Melissa Farrell, managing director at Prudential Mortgage Capital, at the 2010 International Real Estate Capital Markets Conference here. Farrell and her fellow panelists at Friday’s event, which was co-sponsored by Columbia Business School and Goodwin Procter LLP, charted the progress commercial real estate has made in coming back from the near-paralysis that set in after the weekend of Sept. 15, 2008, but also detailed the world of challenges that still must be overcome.

However, in discussing these challenges, the panelists onstage at the Times Center made it clear that they were not insurmountable. In the debt markets panel moderated by Barclays Capital’s US head of real estate banking, Schecky Schechner, Boston Properties president Douglas Linde raised the specter of the hundreds of billions of dollars in commercial mortgages that will be coming due. Yet he then pointed out, “Not all of the loans that are maturing in the next few years are underwater. It’s a question of how you finance.”

Linde also disputed the widely held perception that a shortage of capital has clamped down on deal flow. “There’s more than enough capital,” he said. The issue is that the various levels in the capital stack haven’t come to grips with the decline in fundamentals. “It’s a value problem.”

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