Taylor Grant, receiver with California Real Estate Receiverships, observed that the volume of distress he's seen so far has met his expectations at the wholesale, but has proven disappointing at the retail level. "The retail buyers have not seen the deal flow they want," he said, adding that it's up to the wholesalers-e.g., special servicers-to move the assets out to their ultimate owners.

Where the opportunities are, who's getting the best deals and strategies for success were all part of the conversation. Roark called the current market "a tale of two cities," largely on grounds of the availability of capital. "Capital is going to the REITs, the REITs are buying the triple-A properties in gateway cities and the rest is going to the wolves," he said.

As for the best deals, Grant said the jury's still out. Grant said he's been seeing many one-off deals happening lately; the question, he added, was whether they're overpaying compared to pool buyers. With regard to pool buyers, Grant said, "That scorecard's not done yet. The economy and employment growth will determine if these bets were good ones."

Roark opined that the buyers who've gotten the best bang for the buck over the past 24 months have been those who bought portfolios of small-balance loans. Ryan Anderson, co-president/partner at Mariner Real Estate Management, concurred with Roark's view of small-balance loans as an opportunity, but one that requires a great deal of manpower to pursue, given the greater volume of loans that must be considered in a portfolio of this type.

Galli noted two common practices among the players in deals his firm has helped orchestrate lately, both geared toward increasing the bidders' chances of success: teaming with the right professionals in terms of "finding talent that has the most experience" with specific asset classes and particular regions; and doing "the most extensive due diligence as may be practical given the circumstances of the sale."

William Green, managing director of Tannery Brook Partners, charted the then-and-now differences in borrower and lender behavior. Following the capital markets meltdown two-and-a half years ago, "there was a market-wide sense of free fall," Green said. "No one had any conviction about where the market was or where it was going." And although market players could talk "in the abstract" about the attractive pricing they saw, "nobody really had any conviction to pull the trigger." Investment banks were probably the first to make a move, he said, cleaning out their mark-to-market portfolios early.

Today, Green said, following the era of extend and pretend, "you see those same banks more willing to go ahead and make a full resolution." As for borrowers, whom Green believed responded "generously" under the circumstances while trying to protect their good names, "you have to have a default to get anybody's attention, and it doesn't seem to be as much of a mark against them."

Special servicers today are more willing to make deals, Green said, "but it is a very arduous process for a simple reason-they're not afraid of the assets. If they have to own them in the end, they're not afraid." Non-money center banks are finally "capitulating," Green said, adding that today a lot of them "probably regret not hitting the exit button in 2008."

However the game plays out, it's likely to go into overtime. "We're in the seventh inning, but maybe somebody forgot to tell us it's a double-header," Grant commented.

Roark estimated that we'll see as much as $200 billion in loans originated this year, as against $400 billion to $500 billion in maturing debt during the next two years. "I don't know where that money is going to come from," he said. Green similarly predicted a long slog, saying there will be no full recovery in the market until home ownership drops below 60%.

On the subject of residential real estate, the discussion turned to the eventual fate of the GSEs. Given the two diametrically opposed views on the future of Fannie Mae and Freddie Mac, with some calling for the GSEs to be retained and others saying they should be phased out, "It's more of a political question than an economic question," said Roark. "The politics of this thing are extraordinary." For example, Green said one scenario being considered would entail separating the GSEs' multifamily business lines from their single-family lending. That being said, Roark predicted that Fannie and Freddie ultimately would be broken up.

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