Where Does CMBS Go From Here
JP Morgan just completed the second issuance of CMBS this year with a $716 million offering which followed the earlier Royal Bank deal for $309 million in April. There are another roughly $800 million plus a $600 million deals in the pipeline for issuance by August. Beyond that there is not really anything in the near term pipeline, but several others are in the works. If we extrapolate off the $2.5 billion likely by August, then the full year may be only $5 billion or there could be a rush of deals late in the year and we may reach $10 billion. A lot will depend on the credit markets and how they are affected by Europe, and what ends up coming out of Congress.
Latest projections are that the 5% holdback will pass for sure and that it will be vertical, but not have to be consolidated. It is believed that in the end the issuer will have to actually hold the 5%. While there has been a lot of effort to change this, it is likely that will be the outcome, although until it is actually signed into law we cannot be sure. Despite the insistence of various issuers that this will severely crimp CMBS issuance, it is not at all clear this will be so. It becomes more a pricing issue then will there be issuance.
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Joel Ross
Joel Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf. In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.
