IMN’s Inaugural Investors’ Conference on CRE CLOs: Recap
NEW YORK--(BUSINESS WIRE)--Mar 18, 2019--Kroll Bond Rating Agency (KBRA) attended IMN’s inaugural Investors Conference on CRE CLOs in New York City on March 14. The conference was a full day with seven panels dedicated to the commercial real estate (CRE) collateralized loan obligations (CLO) market, with over 350 registered participants.
Topics that consistently reemerged throughout the day include:
- The consensus on almost every panel is that issuance will be flat in 2019, compared to last year’s $13.9 billion volume. An audience poll and the investors forum were a bit more bullish, expecting a moderate uptick.
- The addition of new lenders in the transitional loan space is making it harder to source loans which allow for the necessary returns but stays within an issuers’ credit box.
- Collateral reporting must be improved in order to create more liquidity in the market, which will help growth prospects within CRE CLOs. However, this could conflict with an issuers’ desire to maintain a level of control over the release of borrower and other proprietary business information.
Based on the different viewpoints, the following additional takeaways emerged:
- Issuer: The value of CRE CLO financing goes beyond the cost of funds compared to warehouse lines. CRE CLOs offer issuers a way to diversify funding sources, are nonrecourse, and do not require mark-to-market on the assets.
- Servicing and Asset Management: The ability to manage the loan through the full life cycle is critical to the success of the platform. This includes overseeing business plans, managing ongoing funding, approving modifications, as well as working out the collateral if necessary.
- Investors: The lack of liquidity in the secondary market for the asset class remains a concern as the sector is still relatively small compared to the overall structured finance market.
KBRA was proud to co-sponsor the event, along with 16 other firms, and its coverage of the event included live tweets. Please be sure to follow us on Twitter to see our tweets from the conference.
To view the full report, click here.
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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.
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Roy Chun, Senior Director
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KEYWORD: UNITED STATES NORTH AMERICA NEW YORK
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SOURCE: Kroll Bond Rating Agency
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PUB: 03/18/2019 02:06 PM/DISC: 03/18/2019 02:06 PM