Government Sponsored Organizations
What role are government-sponsored organizations playing in the real estate market today, and does that represent more of the same or a change in what’s been going on? Tom Fink stresses that government-sponsored agencies are still very important factors in today’s real estate marketplace, and the multifamily market, Freddie Mac and Fannie Mae, are still the primary source of capital. “We continue to see a lot more of private capital from insurance companies, equity funds trying to buy and invest in the multifamily space,” he says, “but they still provide a huge chunk of the capital.”
Government-sponsored organizations still continue to issue a lot of securities. In fact, government-sponsored entity multifamily securities are now a new asset class in the Barclays performance indices, which are used to track the fixed income market. So, they are around to stay for a while.
Aaron Kaiser: Hello, I'm Aaron Kaiser, partner at EisnerAmper and Co-Chair of our firm's Real Estate Practice. It's my pleasure today to introduce Tom Fink, Senior Vice President and Managing Director of Trepp LLC. Trepp was founded in 1979 and is the leading provider of information analytics and technology to the commercial mortgage backed securities, commercial real estate and banking markets. Welcome. What role are the government sponsored organizations, the Freddies and the Fannies of the world, playing in the market today, and how does that represent... Does that represent more of the same, or a change from what's been going on?
Tom Fink: I think the government's sponsored agencies are still very important factors in the marketplace today. In the multifamily market, Freddie Mac and Fannie Mae are still the primary source of capital.
We continue to see a lot more private capital from insurance companies, equity funds trying to buy and invest in the multifamily space, but they still provide a huge chunk of the capital. I think the purpose and the program at the federal level is to ratchet back and dial back some of that activity, but they continue to be a major source of capital in the multifamily space. They still continue to issue a lot of securities and in fact government sponsored entity, multifamily securities are now a new asset class and the Barclays performance indices which are used to track the fixed income market, but they're around for the stay for a while.
Aaron Kaiser: Tom, thank you very much for your insights and thought leadership.
Tom Fink: Aaron, it was my pleasure. I always liked working with you and the folks at EisnerAmper.
Aaron Kaiser: Thank you. For more information go to EisnerAmper.com
What is the change in the level of non-performing debt and which way is the trend going? Tom Fink discusses the delinquency severity breakdown, saying “we’ve seen a real decline in the overall level of delinquencies in the market.”
How is the New York metropolitan real estate investment market doing? Tom Fink discusses the tri-state area commercial mortgage-backed security delinquency rates. It shows that New York State is outperforming its cohorts in NJ and PA.
Would a rise in interest rates affect the coming wall of maturities? Tom Fink states that if interest rates were to go up substantially that would provide an issue for the marketplace because of the uncertainty of the volatility.
In terms of safety and risk, what trends can be seen in the different lending classes? Tom Fink thinks credit standards have loosened over the last two to three years as more money becomes available and borrowers get better terms and conditions.
After discussing New York, Tom Fink discusses markets around the world from an equity perspective and how there's an awful lot of money is still available for pursuing equity investments in real estates around the globe in terms of debt.
The New York real estate market is doing relatively well. How is New York doing compared to the country as a whole? Tom Fink illustrates by showing the nation sectioned into regions and shows the delinquency rate in each region.
When asked about the important emerging technologies in the marketplace, Tom Fink replies, “I think we still have a long way to go before technology is really a factor in the commercial real estate market space. But, I think it’s still an exciting time”.
Tom Fink discusses the estimated upcoming commercial real estate debt maturities with annual maturities by lender type. The last 3 years have shown a continued erosion of the amount that’s due in 2016 and 2017 as people pre-pay loans.
The real estate industry has made a strong rebound since 2009 – it’s healthy, back on its feet and active. Rates continue to be at a historic low and there is still a huge amount of stimulus outstanding.