No Maturity Worries
There'll be more maturities the next four years than the past four. But are we heading for a black hole? These power players don't think so. (You can stay out of the panic room for now, unless you like the taste of rehydrated beef.) In NY last week, we snapped Cantor Commercial Real Estate CEO Anthony Orso and Deutsche Bank Securities global head of commercial real estate Jonathan Pollack at NYU Schack Institute's 46th annual capital markets conference, where Jonathan said the upcoming maturities will have more capital and credit availability than the last. Anthony adds that assets which can't be refinanced can probably be sold above debt. Goldman Sachs co-head of mortgage trading David Lehman estimated two-thirds will have the ability to refi.
What keeps keeps Dune Real Estate Partners CIO Cia Buckley up at night? It's all government related, like a regulatory environment that puts a drag on opportunity. (Forget about the boogeyman; red tape is the scariest beast.) Like many New Yorkers, she's particularly concerned about NYC's transition to a new mayor. A quick survey of other permanent capital and structured finance honchos revealed these worries: how to maintain a competitive advantage over global and sovereign investors while buying new properties; weaker capital flows; unemployment, social unrest, and perceived political risk worldwide; and the pace of technological change, which quickly renders retail and office buildings obsolete.
When investing abroad, you can't look always at the short term. We're talking a 25-year horizon, like the Canada Pension Plan Investment Board, which is investing $3B to $4B in real estate annually across 14 countries. We snapped its Americas head of real estate investment Peter Ballon with fellow Canadian, Oxford Properties Group SVP of investments Andrew Trickett. Peter's a strong believer in Brazil for the long-term (CPPIB has spent $1.5B there over the past three years, repping some of its biggest investments). CPPIB also believes it must invest in China and India with that horizon in mind. (Hope they're prepared for some spicy food.)