NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) attended this year’s HYDRA conference
held at the New York Athletic Club on March 6 and 7, 2019. Opening
remarks were made by Lisa Pendergast, executive director of the CRE
Finance Council (CREFC), which hosted the event. The conference appeared
to be well attended.
Following two days of panel discussions, some key takeaways emerged, as
As the current economic cycle approaches the longest run in modern
history, there is no clear consensus as to when we will experience a
downturn. However, the general feeling was that we are “late cycle”,
not at the “end of cycle”.
Panelists agreed that real estate markets are unlikely to lead the
next downturn, with corporate debt identified as a more probable
catalyst due to its high levels of leverage.
CMBS market share continues to decline as a result of the
proliferation of alternative lending and debt funds, as well as an
increase in loan originations from commercial banks and insurance
companies. However, CMBS annual issuance expectations remain in the
$70 billion-$100 billion range.
Distressed opportunities are relatively scarce and idiosyncratic;
competition has driven down yields. “Return on equity” is important,
but equally so is “return on effort”.
Investors are executing defensive strategies given it’s late in the
cycle, sacrificing yield for protection; strategies include divesting
equity interest and increasing debt positions, returning to the core
primary markets for safety, and favoring multifamily debt due to
favorable demand demographics.
A total of nine panels were held at the event. KBRA sponsored the event,
along with ten other firms, and its coverage of the conference included
live tweets. Follow us on Twitter
to see our tweets from the event.
To view the full report, click here.
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About Kroll Bond Rating Agency
KBRA is a full-service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
designated as a designated rating organization by the Ontario Securities
Commission for issuers of asset-backed securities to file a short form
prospectus or shelf prospectus, is recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider, and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.
Grejdus, Associate Director
Mike Brotschol, Senior Director
Larry Kay, Senior Director