Mortgage Banking

Making sense of commercial real estate finance.

A Lender’s Viewpoint on the Current Credit Market

Posted by Jordan Crouch on March 6, 2008

The CEO of Column Financial, Keiran Quinn, recently spoke at the Risk, Reward and Real Estate Conference. The following comments are taken from CoStar’s Watch List. Click here to see the full summary of Mr. Quinn’s comments.

  • Out of the $240 billion in CMBS issuance in 2007, 60% of that capacity will be gone in 2008
  • Only $1.5 billion of CMBS originations so far for 2008
  • Portfolio lenders (life insurance co.’s) are picking up some of the slack and will do $40-$50 billion in loans
  • Portfolio lenders can “cherry pick” the loans that they want
  • The government sponsored entities (Fannie/Freddie) are overwhelmed with loan requests
  • Overall property values will decrease by 5-10% due to the liquidity factor
  • Pension Funds and Instituional investors have less competition for acquiring property.

I agree with Mr. Quinn’s comments for the most part. I am seeing first hand the “cherry picking” of the portfolio companies. The one comment I would disagree with is the volume of CMBS in 2008. He says 60% less than 2007 which means that there would be about $96 billion in CMBS origination for 2008. That is too high. With only $1.5 billion originated so far a more realistic number would be in the $40 or $50 billion range. We’ll see how it plays out.

(In the interest of full disclosure my company does business with Column Financial.)

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One Response to “A Lender’s Viewpoint on the Current Credit Market”

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