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Forum Spotlight: Portfolio Lenders 

December 10, 2024

Robert Grudzinski and Kevin Pivnick (Forum chairs), Melissa Farrell and Kristin Khanna (chair-elects), and Scott Dixon and Chris Miculis (past-chairs) form the Leadership Working Group for CREFC’s Portfolio Lenders Forum. This working group sets agendas and priorities for the Forum and represents the constituency on CREFC’s Policy Committee.

Why it matters: Each industry Forum addresses issues critical to their business sector and works to achieve solutions that serve a common purpose.

CREFC works closely with Forum leaders and members to:

• Ensure all voices are heard,
• Assist in finding consensus amidst disparate and converging views,
• Sharing those views when appropriate with regulators and legislators, utilizing CREFC’s experienced Government Relations Team, and
• Develop new best practices and monitor existing ones.

Key Portfolio Lender Focus Areas

Valuation and Rates:

• Declines in valuations and loan risk ratings have moderated over the last few quarters.
• Overall transaction volume remains muted.
• While the Fed has cut rates, interest rates remain elevated.
• Underwriting standards continue to be disciplined.
• Operating expense increases, particularly insurance and real estate taxes, have moderated but remain elevated compared to transactions acquired/underwritten several years prior.

Lending Pipeline and Appetite:

• CRE transaction and lending volume increased slightly leading up to and following the recent interest rate cuts in September and November, but activity is still muted overall.
• Capital markets lending remains open from multiple sources and pipelines slowly continue to build heading into 2025. An uptick in refinancing activity has resulted in some portfolio lenders becoming increasingly focused on retaining existing loans and winning new quality business.
• With the recent jump in longer-term rates in Q4, coupled with the expectation for additional interest rate cuts on the horizon, shorter-term floating-rate deals with prepayment flexibility remain the most attractive products for borrowers in the market.

Asset Management: Recent improvement in capital markets conditions, most evidenced by strong CMBS market issuance, has created more tangible financing options for borrowers and increased refinancing activity.

• Still, elevated interest rates and high cap costs continue to require substantial liquidity from many borrowers and generate elevated overall refinancing risk.
• Lenders continue to address maturing or challenged loans with a variety of strategies, including loan sales.

Capital Markets: Year-to-date SASB issuance is at near-record levels ($68.7 billion vs. previous high in 2021 of $76.5 billion for the same time period) and lenders are open for business as both transaction activity and loan refinancing pick up pace.

What They’re Saying: Lenders spent much of the pre-election period awaiting 2024 election results to best understand ramifications for the CRE market. The effects of shifting policies on interest rates, economic growth, and regulatory considerations will materially influence lending strategies and market liquidity in 2025.

Key Policy Committee matters:

• Basel Endgame: Bank Capital Requirements
• Foreign Investment
• Beneficial Ownership Reporting
• SEC Climate Reporting
• NAIC Ratings
• National Flood Insurance Program

What's Next: Forum Leaders look forward to presenting CREFC members with an update on their forum at the Annual January Conference in Miami. As June 2025 approaches, the chairs will seek nominations for the next Chair-Elect to join their leadership slate.

• To join the Portfolio Lenders Forum, please register here.

Contact Rohit Narayanan (rnarayanad@crefc.org) for any Forum related questions. 

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Forums Update: Servicing Administration and Special Situations

November 26, 2024

Pamela Dent and Adam Fox (Forum Chairs), Alex Killick and Dana Jo Martino (Chair Elects), and Leslie Hayton and Tony Yousif (Past Chairs) form the “Leadership Working Group” of CREFC’s Servicing Administration and Special Situations Forums. This group sets agendas and priorities for the Forum based on members of their Forum and represent the constituency on CREFC’s Policy Committee.

What’s New: Ongoing market challenges continue to drive discussions within the Servicers Forum:

• At the CREFC June conference, servicers focused on performing and non-performing loans in various markets.
• Today, the focus is on non-performing loans, from all perspectives —borrower, lender, and investor.
• There are no easy answers. The general consensus is that every loan and asset must be individually evaluated for the option that yields the best results.
• Recent interest-rate volatility and improved market issuance through 2024 continue to create a dynamic servicing environment.

Key Servicer Focus Areas:

• Upcoming maturities and borrowers’ ability to refinance
• Monitoring and tracking servicing activity
• Transparency
• Complexity of non-recoverable advance decisions and their impact on transaction waterfalls
• Collateral/asset valuation
• Rising delinquencies
• GSE focus on property quality and tenant protections
• Loan covenants
• Increasing costs and complexity associated with maintaining required insurance coverage
• Special Servicer remediation plans

What they’re saying: Today’s discussions focus on:

• Uncertainty surrounding asset valuations and the impact on workouts and advancing
• The pick up in new issuance and the notable increasing complexity of loan covenants
• As of September 2024, there were 200 securitized transactions with transaction-level Holdback accounts, more than half of which had a balance of $50,000 or less
• Exit strategies for loans in special servicing
• Balancing borrower requests for extensions with Special Servicers’ recognition of improving interest rates and modification structures to encourage payoffs.

What's next: Servicers are highly focused on the increase in delinquencies, the volume of loans transferring to special servicing, the timing around exit strategies, and when valuations will stabilize.

Servicing Forum leadership expects forum discussions at the January conference to focus on:

• Uncertainty surrounding valuations and their impact on the master servicer role as liquidity provider,
• Providing timely market commentary on performing and non-performing loans, and
• Identifying loans in real distress and expectations around exit strategies.

Key Policy Issue: National Flood Insurance Program (NFIP) Reauthorization.

• Unless Congress takes action, the NFIP is scheduled to expire after Dec. 20, 2024, along with government funding. Short-term extensions of the NFIP, tied to government funding, have been the status quo since the long-term reauthorization expired in 2017.
• Congress has yet to agree on a long-term NFIP extension due to sharp disagreements on program costs and coverage from Senators in flood-prone states. While the program is not expected to expire, a lapse would prevent the NFIP from issuing new policies and reduce the program’s existing borrowing authority.
• Commercial mortgages with a mandatory flood insurance purchase requirement can satisfy the obligation through the NFIP or private insurance, but CRE policies are limited to $500,000 in coverage through the NFIP.

What’s Next: Forum Leaders look forward to presenting members with an update at CREFC’s Annual January Conference in Miami. As June 2025 approaches, the chairs will seek nominations for the next Chair-Elect to join their leadership slate.

To join the Servicing Administration and/or the Special Situations Forum, please register here.

For any forum related questions, please contact Rohit Narayanan (Rnarayanan@crefc.org).

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2024-2025

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Forum Spotlight: IG Bondholders

November 19, 2024

The IG Bondholders Forum’s Leadership Working Group, which includes Rajesh Bansal (Forum Chair), Adam J. Smith (Chair-Elect), and Richard Razza (Past Chair), sets agendas and priorities for the Forum and represents investors on CREFC’s Policy Committee.

Key Investment-Grade Bondholder Focus Areas:

• CRE CLO Surveillance: The CRE CLO Surveillance template is being developed to provide standardized information to investors in a usable Excel-based format. CREFC will host a meeting at the January conference in Miami to solicit additional feedback from all constituents. We aim to have the first draft of the surveillance file ready for use by Q1 2025.
• Ongoing dialogue with stakeholders of the forum (IG investors) to understand their concerns and identify solutions.
• The Leadership Group is concerned with loan extension risk due to higher interest rates. Notably, corporate single-A rated bonds continue to outperform AAA-rated CMBS.

Looking ahead, leaders are focused on working with servicers and trustees to improve responsiveness and access to loan and deal information in a timely manner.

What’s next: Forum leaders look forward to presenting CREFC members with an update on their market sectors in Miami. As June 2025 approaches, the chairs will seek nominations for the next Chair-Elect to join their leadership slate.

To join the IG Bondholders Forum, please register here.

For any forum-related questions, please contact Rohit Narayanan (RNarayanan@crefc.org).

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2024-2025

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The CRE Finance Council Announces New Chairs for Industry Forums

June 11, 2024

New Chairs and Chair-Elects Introduced at Annual June Conference

NEW YORK, June 11, 2024 – The CRE Finance Council (CREFC) announced today new Chairs for the 2024-2025 industry Forums. The new Forum leadership was introduced at CREFC’s Annual June Conference in New York City.

CREFC’s Forums represent specific market constituencies that drive the U.S. commercial real estate finance industry. Forums include:

• Alternative Lenders and High Yield Investors
• B-Piece Investors
• GSE/Multifamily Lenders
• Investment-Grade Bondholders
• Issuers
• Portfolio Lenders
• Servicers

Each of these Forums interacts and addresses issues critical to their business sector and works to achieve solutions that serve a common purpose. CREFC’s Forums manage disparate and converging market views, advocate a consensus of positions to policymakers and lawmakers, educate members, develop market best practices and standards, and work toward the betterment of the entire commercial real estate finance market.

The Incoming slate of Forum leaders includes:

Alternative Lenders & High Yield Investors. CREFC welcomes Rachel Hunter-Goldman (KKR) as Chair-Elect, Samantha Rotchford (MSD) as Chair, and Samir Tejpaul (Square Mile Capital Investments) as Past Chair.

B-Piece Investors: CREFC welcomes Frank Yin (KKR) as Chair-Elect, Peter Lindner (Rialto) as Chair, and Jason Nick (LNR) as Past Chair. In 2023-2024, Lyndsay Stephenson (Prime Finance Partners) served as Past Chair.

GSE/Multifamily Lenders: CREFC welcomes David Haynes (CBRE) as Chair-Elect, Ahmed Hasan (Capital One) as Chair, and Kate Whalen (BMO) as Past Chair. In 2023-2024, the Past Chair was Emily Schultz (Berkadia Commercial Mortgage). Alonzo White (Fannie Mae) and Jason Griest (Freddie Mac) serve as government-sponsored enterprise representatives.

Investment-Grade Bondholders: CREFC welcomes Adam Smith (DWS) as Chair-Elect, Rajesh Bansal (Quiq Capital) as Chair, and Richard Razza (Webster Bank) as Past Chair. In 2023-2024, Jane Rivers (T. Rowe Price) served as Past Chair.

Issuers: CREFC welcomes Shaishav Agarwal (Deutsche Bank) as Chair-Elect, Brigid Mattingly (Wells Fargo) as Chair, and Jane Lam (Morgan Stanley) as Past Chair. In 2023-2024, David Schell (BMO Capital Markets) served as Past Chair.

Portfolio Lenders – Banks: CREFC welcomes Kristin Khanna (Barclays) as Chair-Elect, Rob Grudzinski (U.S. Bank) as Chair, and Scott Dixon (Truist) as Past Chair. In 2023-2024, Jonathan Salzinger (Bank of America) served as Past Chair.

Portfolio Lenders – Insurance Company: CREFC welcomes Melissa Farrell (PGIM) as Chair-Elect, Kevin Pivnick (Blackstone) as Chair, and Chris Miculis (Nuveen) as Past Chair. In 2023-2024, Stefanie Stewart (Voya Investment Management) served as Past Chair.

Servicers – Servicing Administration: CREFC welcomes Dana Jo Martino (Berkadia) as Chair-Elect, Adam Fox (Fitch Ratings) as Chair, and Leslie Hayton (Wells Fargo) as Past Chair. In 2023-2024, Stacy Ackermann (K&L Gates) served as Past Chair.

Servicers – Special Situations: CREFC welcomes Alex Killick (CWCapital) as Chair-Elect, Pam Dent (Freddie Mac) as Chair, and Tony Yousif (SVN) as Past Chair. In 2023-2024, Andrea Helm (Midland Loan Services) served as Past Chair.

“We want to welcome the new members of our CREFC industry Forums and thank existing and past Forum members for their dedication and excellent work,” said Lisa Pendergast, Executive Director of CREFC.

“For 30 years, CREFC has served as the voice of the now $6 trillion commercial real estate finance industry and CREFC’s industry Forums continue to play a key role in ensuring all industry voices are heard and respected. CREFC’s Forums serve a vital industry function, as they represent key components of the CRE finance markets. A core function of Forum leaders is to work toward consensus among their constituents and then advocate those positions to other market segments and to policy and lawmakers. Forum leaders are also charged with assisting the development of industry best practices and implementing new initiatives critical to their business sectors. I and the entire CREFC community are grateful for our Forum leaders and their contributions and dedication to CRE finance.” 

Contact:

Aleksandrs Rozens

arozens@crefc.org

646-884-7567

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The CRE Finance Council Announces New Chairs for Industry Forums

June 11, 2024

New Chairs and Chair-Elects Introduced at Annual June Conference

The CRE Finance Council (CREFC) announced today new Chairs for the 2024-2025 industry Forums. The new Forum leadership was introduced at CREFC’s Annual June Conference in New York City.

CREFC’s Forums represent specific market constituencies that drive the U.S. commercial real estate finance industry. Forums include:

• Alternative Lenders and High Yield Investors
• B-Piece Investors
• GSE/Multifamily Lenders
• Investment-Grade Bondholders
• Issuers
• Portfolio Lenders
• Servicers

Each of these Forums interacts and addresses issues critical to their business sector and works to achieve solutions that serve a common purpose. CREFC’s Forums manage disparate and converging market views, advocate a consensus of positions to policymakers and lawmakers, educate members, develop market best practices and standards, and work toward the betterment of the entire commercial real estate finance market.

The Incoming slate of Forum leaders includes:

Alternative Lenders & High Yield Investors: CREFC welcomes Rachel Hunter-Goldman (KKR) as Chair-Elect, Samantha Rotchford (MSD) as Chair, and Samir Tejpaul (Square Mile Capital Investments) as Past Chair.

B-Piece Investors: CREFC welcomes Frank Yin (KKR) as Chair-Elect, Peter Lindner (Rialto) as Chair, and Jason Nick (LNR) as Past Chair. In 2023-2024, Lyndsay Stephenson (Prime Finance Partners) served as Past Chair.

GSE/Multifamily Lenders: CREFC welcomes David Haynes (CBRE) as Chair-Elect, Ahmed Hasan (Capital One) as Chair, and Kate Whalen (BMO) as Past Chair. In 2023-2024, the Past Chair was Emily Schultz (Berkadia Commercial Mortgage). Alonzo White (Fannie Mae) and Jason Griest (Freddie Mac) serve as government-sponsored enterprise representatives.

Investment-Grade Bondholders: CREFC welcomes Adam Smith (DWS) as Chair-Elect, Rajesh Bansal (Quiq Capital) as Chair, and Richard Razza (Webster Bank) as Past Chair. In 2023-2024, Jane Rivers (T. Rowe Price) served as Past Chair.

Issuers: CREFC welcomes Shaishav Agarwal (Deutsche Bank) as Chair-Elect, Brigid Mattingly (Wells Fargo) as Chair, and Jane Lam (Morgan Stanley) as Past Chair. In 2023-2024, David Schell (BMO Capital Markets) served as Past Chair.

Portfolio Lenders – Banks: CREFC welcomes Kristin Khanna (Barclays) as Chair-Elect, Rob Grudzinski (U.S. Bank) as Chair, and Scott Dixon (Truist) as Past Chair. In 2023-2024, Jonathan Salzinger (Bank of America) served as Past Chair.

Portfolio Lenders – Insurance Company: CREFC welcomes Melissa Farrell (PGIM) as Chair-Elect, Kevin Pivnick (Blackstone) as Chair, and Chris Miculis (Nuveen) as Past Chair. In 2023-2024, Stefanie Stewart (Voya Investment Management) served as Past Chair.

Servicers – Servicing Administration: CREFC welcomes Dana Jo Martino (Berkadia) as Chair-Elect, Adam Fox (Fitch Ratings) as Chair, and Leslie Hayton (Wells Fargo) as Past Chair. In 2023-2024, Stacy Ackermann (K&L Gates) served as Past Chair.

Servicers – Special Situations: CREFC welcomes Alex Killick (CWCapital) as Chair-Elect, Pam Dent (Freddie Mac) as Chair, and Tony Yousif (SVN) as Past Chair. In 2023-2024, Andrea Helm (Midland Loan Services) served as Past Chair.

“We want to welcome the new members of our CREFC industry Forums and thank existing and past Forum members for their dedication and excellent work,” said Lisa Pendergast, Executive Director of CREFC.

“For 30 years, CREFC has served as the voice of the now $6 trillion commercial real estate finance industry and CREFC’s industry Forums continue to play a key role in ensuring all industry voices are heard and respected. CREFC’s Forums serve a vital industry function, as they represent key components of the CRE finance markets. A core function of Forum leaders is to work toward consensus among their constituents and then advocate those positions to other market segments and to policy and lawmakers. Forum leaders are also charged with assisting the development of industry best practices and implementing new initiatives critical to their business sectors. I and the entire CREFC community are grateful for our Forum leaders and their contributions and dedication to CRE finance.”

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Forum Spotlight: Investment-Grade Bondholders

November 20, 2023

Together, Richard, Rajesh, and Jane form the “Leadership Working Group” for the IG Bondholders Forums. This group sets the agendas and priorities for the Forum, as well as represents investors on CREFC’s Policy Committee.

Key Investment-Grade Bondholders Focus Areas:

• CRE CLO Surveillance template is being developed to provide standardized information to investors in a usable Excel-based format.
• Dialogue with stakeholders of the forum (IG investors) to understand their concerns and identify solutions.
• Work on improving reporting in Conduit and SASB transactions as the buy-side looks for standardized financials from borrowers and better disclosure from servicers with regard to loan modifications and fees.
• Leadership is concerned with loan extension risk as a result of higher interest rates; as a result, corporate single-A rated bonds continue to outperform AAA-rated CMBS.
• In the floating rate market, the replacement of SOFR caps upon expiration is an important topic, especially as loans lack the ability to cover debt service in the current interest rate environment. We continue to focus efforts on disclosure improvements and updating the IRP for these items.
• Transaction volumes are down considerably leading to decade low volume in the Conduit/SASB markets.

Looking ahead, leaders are focused on working with servicers to improve reporting accuracy and timeliness. Rising insurance costs in coastal markets put added stress on landlords.

Key Policy Issues:

• SEC’s Conflict of Interest in Securitization Proposal: The definitions are broadly written and could engulf numerous CMBS participants and a broad range of “conflicted activities” that go beyond shorting a transaction. CREFC submitted two comment letters on the issue and is engaging with lawmakers on Capitol Hill.
• 15c2-11 Public Disclosure of 144A Bond: The SEC recently issued an order exempting 144A fixed-income securities from 15c2-11 disclosure. CREFC and its members urged the SEC and Congress to take action to prevent the application of 15c2-11 to fixed income securities. The exemption order is a major win for the industry.

What’s next? Forum leaders look forward to presenting CREFC members with an update on their forum at the Annual January Conference in Miami. Soon after, the chairs will seek nominations for the next Chair-Elect to join their leadership slate.

To join the IG Bondholders Forum, please register here. For any forum related questions, please contact Kathleen Olin at kolin@crefc.org

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