41st Annual Capital Markets Conference
The 2008 Capital Markets Conference included a powerhouse panel on the outlook for New York City. From left: Michael D. Fascitelli, Vornado Realty Trust; Marc Holliday, SL Green Realty Corp.; William L. Mack, Apollo Real Estate Advisors; Stephen M. Ross, Related Companies; William C. Rudin, Rudin Management Company, Inc.; and Larry A. Silverstein, Silverstein Properties, Inc.
Nearly 800 industry leaders and students heard informed speculation on prospects for real estate finance at the Schack Institute’s 41st Annual Capital Markets in Real Estate Conference held in late 2008 in New York City. Leading experts offered potential solutions for speeding the economy’s recovery and estimates about when the slump would end. In this article, you’ll find some of the highlights and speakers from this year’s conference panels.
Transcripts
- Laurence Fink's Keynote Address
- Private Equity: Global Opportunities
- Debt Capital Markets
- Who Has the Capital
- Out of Chaos Comes Order
- Is Manhattan Still the Golden Apple?
BlackRock’s Laurence Fink Gives Keynote Address
According to keynote speaker Laurence Fink, BlackRock, Inc. chairman and CEO and NYU trustee, the current credit crisis originated in 2001 when interest rates were reduced to historic lows to stimulate the trembling post-9/11 economy. “Regulators were not concerned about 35-to-1 leverage in security firms or the creation of sovereign investment vehicles or other single-purpose corporations,” he said, recalling that between 2002 and late 2006 leverage in bank loans soared from 3-to-1 to 7-to-1 as regulators looked on.
Fink said that the near-term outlook for real estate demand is “very, very low.” He discouraged purchases at a cap rate of seven to eight percent because there is no liquidity. “If corporations can start funding at 250 to 300 basis points over Treasuries, then the market will recover,” he said. “Federal interest subsidies for 30-year residential mortgages should be the centerpiece of Washington’s real estate recovery program.”
Private Equity: Global Opportunities
Richard A. Kessler, COO, Benenson Capital Partners, LLC, and adjunct associate professor at the NYU Schack Institute of Real Estate, moderated a panel on global opportunities in private equity. Panelists included Jeffrey A. Barclay, ING Clarion Partners LLC; Stuart M. Rothenberg, Goldman Sachs Group, Inc.; Richard B. Saltzman, Colony Capital, LLC; Wendy A. Silverstein, Vornado Realty Trust; and K. Jay Weaver, Walton Street Capital, LLC.
Debt Capital Markets: Tradition Returns
Schack Institute adjunct faculty member Stephen Pearlman, a conference co-chair and director of Houlihan Lokey, presided over a panel examining debt management.
Panelists included Mark Buono, Goldman Sachs Group, Inc.; Richard Coppola, TIAA-CREF; Michael P. Higgins, CIBC World Markets Inc.; Michael Mazzei, Barclays Capital; Randy Reiff, J.P. Morgan; David A. Twardock, Prudential Mortgage Capital Company; Scott Waynebern, Deutsche BankSecurities Inc.; and Mark Wilsmann, MetLife, Inc.
Who Has the Capital?
Michael Stoler led a panel that discussed the search for capital around the globe. Stoler, then senior principal at Apollo Real Estate Advisors, adjunct associate professor at the Schack Institute, and a conference co-chair, asked his panel why foreigners would want to invest in American assets.
Panelists included: Matthew M. Bronfman, Jamestown Properties; Paul Brophy, Anglo Irish Bank Corporation Limited; Richard Dansereau, Cadim; and Richard J. Mack, Apollo Real Estate Advisors.
Structure Finance: Out of Chaos Comes Order
Scott Waynebern, then head of whole loans and syndication at Deutsche Bank Securities, Inc., moderated a panel on structure finance. Panelists included Adam J. Brooks, Goldman, Sachs & Co.; Jonathan Z. Cohen, Resource America, Inc.; Robert R. Foley, Gramercy Capital Corp.; James G. Glasglow, Jr., Five Mile Capital Partners LLC; Stephen D. Plavin, Capital Trust, Inc.; and Jean-Michel “Mitch” Wasterlain, ORIX Capital Markets, LLC.
Is Manhattan Still the Golden Apple?
Powerhouse Panel of NYC Real Estate Leaders Forecast 2009
During the luncheon session, Divisional Dean D. Kenneth Patton asked real estate leaders to propose urban redevelopment policies for the Obama administration and predict how their home field of Manhattan might fare as the nation struggles out of the credit crunch.
Panelists included Michael D. Fascitelli, president, Vornado Realty Trust; Marc Holliday, president and CEO, SL Green Realty Corp.; William L. Mack, founder and senior partner, Apollo Real Estate Advisors; Stephen M. Ross, chairman and CEO, The Related Companies; William C. Rudin, president, Rudin Management Company, Inc.; and Larry A. Silverstein, president and CEO, Silverstein Properties, Inc. Michael Fascitelli favored the Treasury Department supporting companies that can leverage the money 10 to 12 times, while William Rudin and Marc Holliday maintained that strengthening the credit of major financial services companies would greatly benefit the New York City real estate market because these institutions have been Manhattan’s biggest space leasers for generations.
“If things do not get worse, there are great prospects in debt securities across the board,” said William Mack. “The yields are enormous based on the traditional risks. But before investing capital, it is better to look for stabilization.” Stephen Ross proposed that the government needs to pay attention to the infrastructure instead of telling people to buy. “During the Great Depression, the country was able to create great projects. Infrastructure and economic development projects that affect the entire region would be a better investment,” said Ross. “New York has to work with New Jersey to get more of the federal dollars that come with the stimulus package.”
Larry Silverstein confessed astonishment at the bidding on the Drake Hotel site, evidence of investors’ yearning to take advantage of the downturn to swoop up intrinsically valuable assets at bargain prices.
The panelists made pessimistic near-term forecasts about the credit situation, but Rudin noted that, unlike the 1970s when people were leaving New York City, companies are staying. “There are still issues of layoffs and the health of the company, but there is not this flight en masse to other locations,” he said. “The foundation of the city is still strong. People still want to live and work in New York City.”
Silverstein took a long-term view. “The opportunities will be there to buy small properties,” he said. “Get together with other young players, pool capital, and invest. By going through the process, the values will increase over time and opportunities will follow.”