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Rep. French Hill to Lead House Financial Services Committee

December 17, 2024

Congressman French Hill (R-AR) won a four-way race to become chairman of the House Financial Services Committee (HFSC) in the next Congress. Hill will replace retiring Rep. Patrick McHenry (R-NC) who served as the lead HFSC Republican since 2019 and as chairman for the past two years.

Why it matters: Rep. Hill brings a deep knowledge of financial markets as he takes the committee gavel. He was a founder and CEO of Delta Trust and Banking Corp., and he was Deputy Assistant Secretary of the Treasury for Corporate Finance from 1989 to 1991.

• Hill was first elected to Congress in 2014 and has served on HFSC in a variety of leadership capacities, including as the current committee vice chair and chair of the Digital Assets Subcommittee.
• CREFC has a strong relationship with Rep. Hill, who has been a key ally on issues like Basel Capital rules, Conflicts of Interest in Securitization, and 15c2-11.
• In his pitch for the chairmanship, Hill laid out his “Make Community Banking Great Again” plan, which includes a number of proposals to tailor and reduce regulatory burdens on financial institutions.

Go deeper: The House GOP selects its committee leaders via the Steering Committee, which includes the chamber leadership (Speaker, majority leader, etc.) and other rank-and-file members selected from various regions.

The race to succeed McHenry was among the most closely contested in this cycle as Hill faced off against other senior committee members:

• Rep. Andy Barr (R-KY) was first elected in 2012 and currently serves as HFSC Financial Institutions Subcommittee Chair;
• Rep. Bill Huizenga (R-MI) was first elected in 2010 and currently serves as HFSC Oversight Subcommittee Chair; and
• Rep. Frank Lucas (R-OK) was first elected in 1994 and currently serves as Chairman of the House Space, Science, and Technology Committee. Lucas also had been the lead Republican on the House Agriculture Committee.

What they’re saying: Toward the end of the campaign, insiders saw the race tighten between Hill and Barr, with some expecting Barr to take the gavel given Hill’s close ties to ousted Speaker Kevin McCarthy (R-CA). Barr is also seen as a favorite to succeed Sen. Mitch McConnell (R-KY) should he choose not to run for re-election in 2026.

The bottom line: The HFSC contest was not acrimonious and observers noted that Republicans had strong options in all the candidates. Former HFSC chair Rep. Jeb Hensarling told Politico:

“It was going to be a good day for America and her capital regardless of who was chosen. French Hill will be a fantastic chair. Absolutely fantastic.”

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Rep. French Hill will lead the House Financial Services Committee starting in January 2025.

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Capital Markets Update Week of 12/17

December 17, 2024

Private-Label CMBS and CRE CLOs

One transaction priced last week:

• ORL 2024-GLKS, an $800 million SASB backed by a floating-rate, five-year loan (at full extension) to a joint venture between Elliott Management and Trinity Investments to refinance the 1,592-room Grande Lakes Orlando Resort.

By the numbers: According to Commercial Mortgage Alert, two transactions totaling $1.4 billion are currently in various stages of marketing. Year-to-date private-label CMBS and CRE CLO issuance totaled $111.1 billion, 142% ahead of the $46 billion for the same period last year.

Spreads Narrow

• Conduit AAA spreads were tighter by 2 bps to +75, and A-S spreads were tighter by 5 bps to +105. YTD, AAA and A-S spreads are tighter by 41 bps and 60 bps, respectively.
• Conduit AA and A spreads were unchanged at +145 and +175, respectively. YTD, AA and A spreads are tighter by 80 bps and 200 bps, respectively.
• Conduit BBB- spreads were unchanged at +450. YTD, BBB- spreads have tightened by 450 bps.
• SASB AAA spreads were tighter by 4 – 7 bps to a range of +95 to +115, depending on property type. YTD, they have narrowed from a range of +143 to +212.
• CRE CLO AAA spreads were tighter by 10 bps to +135 / +140 (Static / Managed), and BBB- spreads were tighter by 25 bps to +375 / +400 (Static / Managed). YTD, they have narrowed from +200 (Static / Managed) and +600 (Static / Managed), respectively.

Agency CMBS

• Agency issuance totaled $4.7 billion last week, consisting of $2.9 billion in Fannie DUS, $1.2 billion in Freddie K, ML, and Multi-PC transactions, and $629.6 million in Ginnie transactions.
• Agency issuance for the year totaled $116.9 billion, 1% higher than the $116.1 billion for the same period last year.

The Economy, the Fed, and Rates…

Economic Data

• Inflation: The inflation rate ticked up to 2.7% in November from 2.6% in October, consistent with economists’ expectations but still indicative of persistent price pressures. Core CPI inflation rose by 0.3% in November, marking the fourth consecutive month at this pace, keeping the 12-month rate at 3.3%. While shelter inflation slowed, core goods prices rose, reflecting persistent inflationary pressures.
• Producer Price Index (PPI): Producer prices showed an unexpected acceleration in November, rising 0.4% (the highest since June), though components feeding into core PCE, the Fed’s preferred inflation measure, were relatively soft. A significant surge in food prices, particularly eggs (up 55%) and fresh vegetables (up 33%) drove the increase.
• Labor Market: Jobless claims rose to 242,000 in the week ending December 7, up from 225,000. While some increase may be due to seasonal adjustment challenges around holidays, the trend suggests cooling labor market conditions. The median duration of unemployment reached 10.5 weeks in November, up from 9.0 weeks a year earlier.

Federal Reserve Policy

• Expected Rate Cut: The Fed is expected to announce a 25-basis-point rate cut at its December 17–18 meeting, lowering the federal funds rate to a target range of 4.25%-4.5%. This would mark the third consecutive rate reduction despite inflation persisting above the 2% target. Market pricing shows a near-100% probability for this move.
• Neutral Rate Uncertainty: Ongoing discussions about the neutral rate (r*) - the rate at which monetary policy neither stimulates nor restricts growth - are influencing Fed decisions. Estimates for r* have edged higher to 2.875% in recent months, reflecting shifts in long-term economic fundamentals. As Fed Chair Jay Powell noted: "We're pretty sure it's below where we are now," though the exact level remains uncertain.
• Long-term Strategy: Beyond December, the Fed will likely pause or slow its rate-cutting trajectory to balance the risks of entrenched inflation and labor market destabilization. Powell explained that the Fed faces a delicate balance: "We're mindful of the risk that we go too far, too fast, but also of the risk that we don't go far enough."
• Implications of Trump Policies: President-elect Trump’s proposed tariffs and tax cuts could introduce upward inflationary pressures, complicating the Fed’s efforts to stabilize prices. Economists warn of potential policy confrontations between the administration and the central bank in 2025.
• Federal Deficit Concerns: The federal budget deficit hit $1.83 trillion in fiscal year 2024, the highest since the pandemic years, driven by increased debt interest costs and higher Social Security and defense spending. These fiscal imbalances could limit the flexibility of both monetary and fiscal policymakers.

Market Reaction

• Treasury Yields: Treasury yields surged, with the 10-year yield climbing 25 bps over the week to 4.40% and the 30-year yield up 26 bps to 4.60%. The yield curve steepened, signaling market recalibration as investors priced in fewer rate cuts in 2025. Breakeven TIPS rates increased, driven by elevated food prices and resilient economic activity.
• Equities: Equity markets, particularly tech-heavy indices, have rallied on expectations of continued monetary easing. The Nasdaq Composite surpassed 20,000 for the first time on Wednesday. However, the rally contrasts with concerns over longer-term inflation risks and fiscal constraints.

Go deeper: You can download CREFC’s one-page MarketMetrics with statistics covering the economy and the CRE debt capital markets here.

Contact Raj Aidasani (raidasani@crefc.org) with any questions.

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CREFC Highlights Threats to Debt Liquidity 

September 25, 2023

This week, CREFC continued its ongoing efforts to highlight government policies that could negatively impact CRE and multifamily debt liquidity. The key concerns include:

• Basel Endgame Proposal that would raise capital requirements on banks with >$100 billion in assets. Some estimate overall capital charges could increase 20%, which means less credit available for borrowers.
• The SEC’s overly broad Conflicts of Interest in Securitization proposal could levy additional compliance burdens and limitations on CMBS participants and possibly chill participation in the market.
• The looming threat to the 144A market in 2025 when the SEC’s interpretation of 15c2-11 will require broker-dealers to verify information is publicly available on 144A bonds to freely quote them.

Any of these proposals in isolation could prove challenging for CRE finance in normal times. But during this difficult market, government policy could exacerbate the cost and availability of CRE and multifamily credit. The above will only exacerbate the market challenges to CRE debt liquidity given today’s sharply higher benchmark and mortgage rates.

Last week, CREFC met with key policymakers including:

• SEC Commissioner Hester Peirce;
• Rep. Andy Barr (R-KY), Chairman of the Financial Institutions and Monetary Policy Subcommittee of the House Financial Services Committee; and
• Key Democratic and Republican members and staff of the House Financial Services Committee.

Policymakers are interested in developments in the CRE markets, and there is bipartisan concern that regulation, including capital rules, may overburden access to credit for CRE during one of the more challenging market environments since the GFC.

Contact Sairah Burki (sburki@crefc.org) with questions on regulatory advocacy and David McCarthy (dmccarthy@crefc.org) with questions about legislative advocacy. 

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Key Committees See Influx of Freshman Lawmakers

December 17, 2024

The makeup of key committees in Congress is starting to take shape and there have been a few surprises. Notably, a record number of freshman lawmakers will join the so-called “A Committees.”

As reported in the story above, Rep. French Hill (R-AK) beat out Rep. Andy Barr (R-KY) for the coveted top spot on the Financial Services Committee. He will replace retiring chair Rep. Patrick McHenry (R-NC).

The leadership of key “A Committees” is listed below.

Committee on Appropriations

• Chairman: Tom Cole (R-OK)
• Ranking Member: Rosa DeLauro (D-CT)

Committee on Energy and Commerce

• Chairman: Brett Guthrie (R-KY) (New chair)
• Ranking Member: Frank Pallone (D-NJ)

Committee on Financial Services

• Chairman: French Hill (R-AR) (New chair)
• Ranking Member: Maxine Waters (D-CA)

Committee on Ways and Means

• Chairman: Jason Smith (R-MO)
• Ranking Member: Richard Neal (D-MA)

Why it matters: The GOP appointed a record number of eight freshman members to the “A Committees.” No newly elected lawmakers made it to the Ways And Means Committee, for which freshman members are rarely selected.

However, there were some new additions to the Ways and Means Committee on the GOP side. They are:

• Rep. Aaron Bean (R-FL)
• Rep. Max Miller (R-OH)
• Rep. Nathaniel Moran (R-TX)
• Rep. Rudy Yakym (R-IN)

The eight freshman members who made it on to the other three “A Committees” are:

• Appropriations Committee: Rep-elect Riley Moore (R-WV)
• Energy and Commerce Committee: Reps-elect Gabe Evans (R-CO), Julie Fedorchak (R-ND) and Craig Goldman (R-TX)
• Financial Services Committee: Reps-elect Mike Haridopolos (R-FL), Marlin Stutzman (R-IN), Tim Moore (R-NC) and Troy Downing (R-MT)

The bottom line: These freshman members have the rare privilege of sitting on highly sought-after committees and likely will have an impact on policies relating to financial markets, energy, and government spending.

Contact James Montfort (jmontfort@crefc.org) with any questions.

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CREFC Welcomes Commercial Real Estate Finance Industry to its Annual Miami Conference on January 12-15, 2025

December 10, 2024

Academy Award-winning filmmaker Ron Howard and U.S. Lieutenant General H.R. McMaster join as special guests. Industry veterans Barry Sternlicht and Jeffrey DiModica share their views on the 2025 outlook for commercial real estate finance and markets.

NEW YORK, Dec. 10, 2024 – The CRE Finance Council (CREFC), the trade association that exclusively represents the nearly $6 trillion commercial and multifamily real estate finance industry, will host its annual Miami Conference on January 12-15, 2025. CREFC's largest event of the year will bring together over 2,200 finance professionals to discuss the latest opportunities and challenges that are top of mind for the industry.

The Miami 2025 Conference serves as a benchmark for the industry, setting the tone for the year ahead. Unique panels staffed by seasoned industry professionals across the spectrum will examine lending for alternative CRE asset classes and explore the promise of AI and other innovations in CRE. The conference will also take a keen focus on how the industry is managing amidst escalating insurance costs, still elevated rates, and the role of strategic debt in CRE finance. A series of CREFC’s Industry Forum meetings will address issues impacting key segments of the market.

Former U.S. National Security Advisor, Lieutenant General H.R. McMaster kicks off CREFC Miami’s opening session with his views on current global events and geopolitical risks. A three-star general recognized for his leadership in Afghanistan and Iraq, McMaster will give an informative, in-depth, and refreshingly candid analysis of key geopolitical, technological, and security issues.

Academy Award-winning filmmaker Ron Howard will join Miami 2025 for a luncheon conversation. From the critically acclaimed Oscar-winning dramas A Beautiful Mind and Apollo 13 to the hit comedies Parenthood and Splash, Howard has created some of Hollywood’s most memorable films and series.

CREFC's Miami conference draws thousands of industry professionals each year and is viewed as the gold standard of CRE-related conferences. This year, key sessions include:

• The Starwood Conversation: What Lies Ahead in Commercial Real Estate Featuring Starwood Capital Group Chairman and CEO Barry Sternlicht and Starwood Property Trust President and Managing Director Jeffrey DiModica
• Reimagining Cities: Innovation at the Intersection of Technology, Mobility and Urban Development
• The State of Housing: Innovations, Alternatives, and Traditional Approaches
• Bid/Ask: Perspectives from the Trading Floor
• Bricks and Bots: AI and Innovation in CRE
• Industry Leaders Roundtable
• Potpourri: Lending on Alternative CRE Asset Classes
• Building on Leverage: Strategic Debt in CRE Financing
• CRE Financing Risk Amidst Skyrocketing Insurance Costs
• The Sunshine State: Opportunities and Challenges in a Booming Market

"We are excited to bring together leading commercial real estate finance industry market participants such as Starwood’s Barry Sternlicht and Jeffrey DiModica at our annual January Conference in Miami," said Lisa Pendergast, Executive Director, CREFC. “Add to that our speakers Academy Award-winning filmmaker Ron Howard and former U.S. National Security Advisor, Lieutenant General H.R. McMaster, and the conference becomes both a learning and entertaining event that helps kickstart the new year.”

"Our timely panel discussions will provide attendees with critical insights into challenges and opportunities facing commercial real estate finance in 2025. Panel speakers will examine new urban development trends and explore the untapped potential of AI and other technology-driven innovations in CRE. Also, industry veterans will focus on how commercial property owners manage escalating insurance costs and the role new sources of capital will play in CRE finance markets in 2025 and beyond.”

To learn more about CREFC’s upcoming conferences and events, please visit: https://www.crefc.org/events

About CREFC

The CRE Finance Council (CREFC) is the trade association for the nearly $6 trillion commercial real estate finance industry with a membership that includes approximately 400 companies and 19,000 individuals. Member firms include balance sheet and securitized lenders, loan and bond investors, private equity firms, servicers, rating agencies, and borrowers. For 30 years, CREFC has promoted liquidity, transparency, and efficiency in the commercial real estate finance markets, and functioned as a legislative and regulatory advocate for the industry, playing a vital role in setting market standards and best practices and providing education for market participants.

Contact:

Aleksandrs Rozens

ARozens@crefc.org

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Election Roundup: House and Senate Update

December 10, 2024

With the final race in California now called, the 2024 federal election season is officially concluded. Republicans will control the House with a narrow majority of 220- 215 after a net loss of two seats.

• Democratic challenger Adam Gray beat incumbent Congressman John Duarte in California’s 13th congressional district on Dec. 4 by a margin of 187 votes, out of 200,000 cast.

Why it matters: Republicans will start the 119th Congress with the slimmest House majority since the Great Depression. This margin is expected to tighten as members of the House depart to join the Trump administration.

Thus far, three Republican reps will likely leave in early January:

• Former Rep. Matt Gaetz (R-FL) resigned from the House last month after being nominated to be the U.S. Attorney General. He withdrew from consideration for the position shortly after being nominated but does not intend to return to Congress.
• Rep. Elise Stefanik (R-NY) plans to resign to become President Trump’s ambassador to the U.N., pending confirmation by the Senate.
• Rep. Mike Waltz (R-FL) will resign to become President Trump’s National Security Advisor.

These vacancies will leave the GOP with a narrow majority of 217-215, until the vacated seats are filled by a special election.

• If one Republican lawmaker is absent during that time period, or votes against the party, a vote could fail in the face of unified Democratic opposition.
• Unlike the Senate where a governor can appoint a temporary replacement, House vacancies are always filled by special election.

Senate Results

Although Republicans narrowly retained their majority in the House, they performed better in the Senate, flipping Democratic seats in Ohio, Montana, West Virginia, and Pennsylvania. The result: the GOP has a 53-47 majority.

• This margin allows the GOP to lose up to three Senators’ votes, as the tie-breaking vote of Vice President JD Vance is allowed in a 50-50 scenario.
• President Trump’s cabinet nominees and federal judges will have a wider berth during Senate consideration, but legislation will still largely be limited by the 60-vote filibuster threshold.
• Democrats’ Senate silver lining includes their successful defense of seats in Michigan, Wisconsin, Arizona and Nevada, four states that voted for President Trump.

Presidential Results

President Trump's decisive victory secured wins in all seven swing states, boosted his vote share in every state, and enabled him to win the popular vote for the first time in his three election campaigns. This marked the strongest performance by a Republican presidential candidate since George W. Bush's re-election in 2004.

The Details: President Trump increased his support in traditionally Democratic states like New Jersey, New York, and California.

While Vice President Harris still won these states, the vote was much closer than expected. Here is how support for the Democratic presidential candidate changed from the previous election:

• California, Harris’ home state, dropped from a 29% winning margin in 2020 to 20% in 2024.
• New York dropped from a 23% margin in 2020 to 12% in 2024.
• New Jersey dropped from a 16% margin to 6%, bringing it into consideration as a swing state in future elections.

Go deeper: For the full map breakdown of how each state voted and the current popular vote tracker click here.

What they’re saying: Republicans have control of the House, Senate and Presidency. However, the narrow margins in the House and the filibuster rules in the Senate may limit how much of their agenda they can push through and how quickly.

Please contact James Montfort (Jmontfort@crefc.org) with any questions. 

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Capital Markets Update Week of 12/10

December 10, 2024

Private-Label CMBS and CRE CLOs

Five transactions totaling $4.8 billion priced last week:

• BX 2024-GPA3, a $1 billion SASB backed by a floating-rate, five-year loan (at full extension) to American Campus Communities, a portfolio company of Blackstone, to refinance a portfolio of 32 student-housing properties
• TCO 2024-DPM, a $1 billion SASB backed by a floating-rate, five-year loan (at full extension) to Taubman Realty to refinance the Dolphin Mall in Sweetwater, FL
• BMO 2024-5C8, a $991.8 billion conduit backed by 40 five-year loans secured by 98 properties from BMO and nine other loan contributors
• FMBT 2024-FBLU, a $975 million SASB backed by a floating-rate, five-year loan (at full extension) to Jeffrey Soffer’s Fontainebleau Development to refinance the Fontainebleau Miami Beach hotel
• BBCMS 2024-5C31, an $872.5 million conduit backed by 39 five-year loans secured by 55 properties from Barclays, Starwood, and nine other loan contributors

By the numbers: Year-to-date private-label CMBS and CRE CLO issuance totals $110.1 billion, 145% ahead of the $44.9 billion for same-period 2023.

Spreads Narrow

• Conduit AAA spreads tightened by 8 bps to +77, and A-S spreads by 5 bps to +110. YTD, AAA and A-S spreads are tighter by 39 bps and 55 bps, respectively.
• Conduit AA and A spreads were unchanged at +145 and +175, respectively. YTD, AA and A spreads are tighter by 80 bps and 200 bps, respectively.
• Conduit BBB- spreads were unchanged at +450. YTD, BBB- spreads have tightened by 450 bps.
• SASB AAA spreads were tighter by 5 – 8 bps to a range of +100 to +122, depending on property type. YTD, spreads narrowed from a range of +143 to +212.
• CRE CLO AAA spreads were tighter by 15 bps to +145 / +150 (Static / Managed), and BBB- spreads were tighter by 50 bps to +400 / +425 (Static / Managed). YTD, they have narrowed from +200 (Static / Managed) and +600 (Static / Managed), respectively.

Agency CMBS

• Agency issuance totaled $6.9 billion last week, consisting of $5.6 billion in Freddie K, Multi-PC, and Q transactions, $1.3 billion in Fannie DUS, and $73 million in Ginnie Mae transactions.
• Agency issuance for the year totaled $112.2 billion, just 1% lower than the $112.8 billion for same-period 2023.

The Economy, the Fed, and Rates…

Economic Data

• Strong Job Growth: The economy added 227,000 jobs in November, rebounding from October's hurricane and strike-affected gain of 36,000 (revised up from 12,000). This exceeded consensus forecasts of 200,000 but came with mixed signals - the unemployment rate edged higher to 4.2%, and the job-finding rate fell to 21.3%, the lowest since the pandemic began.
• ISM Surveys: The ISM Manufacturing PMI rose to 48.4, signaling slower contraction, but continued challenges from high interest rates and policy uncertainty remain. ISM Services PMI fell sharply to 52.1, marking a three-month low and hinting at weakening demand.
• Consumer Sentiment: The University of Michigan's Consumer Sentiment Index rose to 74 in December, the highest since April. However, inflation expectations picked up to a five-month high of 2.9% for the year ahead, with Democrats particularly concerned about potential tariff impacts on prices. This uptick in inflation expectations could influence Fed policy decisions.

Fed Policy & Outlook

• Officials' Stances: Recent Fed commentary suggests increasing caution. Chair Jerome Powell indicated the Fed can "afford to be a little more cautious" given economic strength. Cleveland Fed's Beth Hammack said the Fed is "at or near" the point of slowing rate cuts. Chicago Fed's Austan Goolsbee characterized the labor market as "largely stable" despite data volatility.
• Rate Cut Expectations: Following the jobs report, traders increased their bets on an interest rate cut in December. The market-implied odds of a quarter-point rate cut on December 18 rose to about 90%. However, the upcoming CPI report (December 11) is critical to solidifying the Fed's rate decision.
• Structural Shifts: Some market participants, including BlackRock, argue traditional business cycle analysis may be less relevant given transformative forces like AI, though others warn against dismissing cyclical risks.

Market Reaction & Treasury Yields

• Equity Markets: The S&P 500 continued hitting new records, benefiting from the "Goldilocks" interpretation of the jobs data - showing enough weakness to keep Fed cuts on track while maintaining fundamental economic stability.
• Crypto: Bitcoin surged above $100,000 for the first time last week, a milestone hailed even by skeptics as a coming-of-age for digital assets. Investors are betting on a friendly incoming administration to cement cryptocurrencies' place in financial markets.
• Treasury Yields: Treasuries rallied on Friday following the mixed November employment report. The yield on two-year notes fell 4 bps to 4.10%, reflecting increased confidence in near-term Fed easing. The 10-year yield fell 3 bps to 4.15%.

Go deeper: You can download CREFC’s one-page MarketMetrics with statistics covering the economy and the CRE debt capital markets here.

Contact Raj Aidasani (raidasani@crefc.org) with any questions.

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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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Trump Nominates Former SEC Commissioner Paul Atkins as Next Chair 

December 10, 2024

President-Elect Donald Trump nominated former Securities and Exchange (SEC) Commissioner Paul Atkins on Dec. 4 to replace current SEC Chair Gary Gensler who will step down from the agency on Jan. 20.

• Atkins is the CEO of Patomak Global Partners, a fintech and risk management consultancy he founded in 2009.

Atkins is expected to embrace a deregulatory stance and develop a constructive relationship with the crypto industry.

• This is a sharp reversal from Gensler’s approach, which many market participants characterized as regulatory overreach and unnecessarily combative.
• Not surprisingly, his nomination has been received well by Republican lawmakers, as well as current SEC Republican commissioners.
• Current SEC commissioner Hester Peirce noted on X:

“We have a lot of work to do at the SEC to advance free markets, capital formation, investor choice, and innovation. I’m delighted that Paul Atkins will be returning to lead the effort.”

Atkins has received some bipartisan support. According to Politico, Sen. Kirsten Gillibrand (D-N.Y.) indicated she was likely to support Atkins’ nomination:

“He has the right experience, and I think he’s a commissioner that would work well with Congress.”

Yes, but: Not everyone is welcoming the announcement. According to Politico, Sen. Elizabeth Warren (D-MA), who will serve as ranking member of the Senate Banking Committee in the next Congress, stated that she is:

“Concerned about putting at the helm of the SEC a Wall Street lobbyist whose main contribution during the last financial crisis was to protest fines against the giant corporations that defrauded investors.”

What’s next: Atkins is expected to carefully review Gensler-era rulemakings and identify opportunities for potential rollback.

• However to repeal rules, regulatory agencies must use the notice and comment process, which can take several months or even years.
• Agency leadership also can guide staff priorities via enforcement, effectuating practical change outside the rulemaking process.

What's next: The SEC’s climate disclosure requirements, currently stayed by the SEC while the rule is in litigation, are likely in Atkins’ immediate crosshairs. Atkins and other former SEC commissioners wrote during the comment period that the [then] proposal “oversteps the Commission’s congressionally delegated regulatory authority.”

CREFC will monitor closely Atkins’ nomination and keep members apprised of significant regulatory and policy developments at the SEC.

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