Servicers: The First to Know...Servicing in an Uncertain Market

Transcription

1 Servicers: The First to Know...Servicing in an Uncertain Market Title in Impact 64 Pt Market Update: Senior Director, in Title Case Subtitle in Palatino 24 pt Seminar Moderator: Stephanie Petosa Managing Director, Fitch Ratings Panelists: Leslie Fairbanks Managing Director, Wachovia Securities Brian Hanson Director, CWCapital Asset Management Mark McCool Managing Director, Capmark Finance Inc. Steven Smith Executive Vice President, Midland Loan Services, Inc. Click to add secondary subtitle Paul Smyth Senior Managing Director, Centerline Capital Group Randy Wolpert Division President, LNR Partner, Inc.

2 Title in Impact 64 Pt in Title Case Subtitle in Palatino 24 pt Click to add secondary subtitle

3 /3/1997 1/3/1998 1/3/1999 1/3/2000 1/3/2001 1/3/2002 1/3/2003 1/3/2004 1/3/2005 1/3/2006 1/3/2007 1/3/2008 AAA CMBS Spreads Long-term Capital Management Source: Morgan Stanley September 11, /2008

4 CMBS Spreads to Swaps (in Basis Points) 1, /1 Analyst report on Citigroup dividend threat 10/3 Fitch cuts ratings of $18 billion of subprime RMBS 9/24-25 $5 billion of CMBS price Market event 9/18 Fed lowers Fed Funds Rate ½ point 8/16 Fed opens Discount Window Super Senior AAA Junior AAA 8/14 Redemption requests due for many hedge funds AA 7/24 Countrywide earnings announcement A 7/12 S&P announces downgrade on 600 tranches of MBS BBB BBB- 6/21 Bear Stearns CDO troubles 5/18 Five weeks after Moody s announcement 4/10 Moody s announces increased CMBS subordination levels 3/13 MBA announces Q4 single-family delinquency results 2/27 Chinese stock market drop /30/2005 1/30/2006 2/28/2006 3/30/2006 4/30/2006 5/30/2006 6/30/2006 7/30/2006 8/30/2006 9/30/ /30/ /30/ /30/2006 Source: and Commercial Real Estate Direct 1/30/2007 2/28/2007 3/30/2007 4/30/2007 5/30/2007 6/30/2007 7/30/2007 8/30/2007 9/30/ /30/ /30/ /30/2007 4

5 CMBS Issuance 80 $Billions Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Jan-Feb 2008 Source: CMAlert.com 5

6 Index of Commercial/Multifamily Mortgage Bankers Origination Volumes (2001 avg. Qrt = 1) Index Value 400 H1 +38% H2-11% Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: 6

7 Year-over-year Percent Change in Commercial/Multifamily Mortgage Origination Volumes 80% 70% nd half st half 60% 49% 40% 38% 20% 18% 0% -4% -1% -20% -15% -12% -11% -30% -40% Conduits Commercial Banks Total Life companies Fannie Mae/Freddie Mac Source: 7

8 2007 REIT Merger & Acquisition Activity Date Buyer Seller Price ($M) # of props Main Type Feb-07 Blackstone Equity Office Properties Trust $39, Office Nov-07 Blackstone Hilton $26, Hotel Oct-07 Tishman Speyer/Lehman/BofA Archstone Smith $22, Apartment Jan-07 SL Green/RexCorp/Marathon Reckson Associates Realty $8, Office Apr-07 Simon Property/ Farallon Capital Mills Corporation $7, Retail Apr-07 Ashford Hospitality/Morgan Stanley CNL Hotels & Resorts $6, Hotel Aug-07 Morgan Stanley Crescent RE Equities $6, Office Apr-07 Centro Properties Group New Plan Excel $6, Retail Aug-07 Macquarie Bank Spirit Finance $3, single tenant Oct-07 Whitehall RE Fund Equity Inns $2, Hotel Jul-07 JER Partners Highland Hospitality $2, Hotel Dec-07 Behringer Harvard IPC US REIT $1, Office Jan-07 Lexington Realty Trust Newkirk RealtyTrust, Inc $1, single tenant Oct-07 Liberty Property Trust Republic Property Trust $ Office May-07 ING Clarion Partners Apple Hospitality $ Hotel Jul-07 Inland Real Estate Corp Winston Hotels $ Hotel Feb-07 Babcock & Brown BNP Residential Properties $ Apartment Jul-07 Apollo RE Advisors Innkeepers USA Trust $ Hotel Aug-07 Apollo/Aimbridge/JF Capital Eagle Hospitality Properties Trust $ Hotel Sep-07 Sentinel Real Estate America First Apartment Investors $ Apartment Apr-07 Record Realty Government Properties Trust $ Office TOTAL Source: Real Capital Analytics $138,589 8

9 Estimated Quarterly Commercial/Multifamily Mortgage Originations by Investor Group $Millions $90,000 $80,000 $70,000 $60,000 $50,000 CMBS conduits $40,000 $30,000 $20,000 Commercial Banks $10,000 GSEs & FHA Life Insurance $0 Q Q Source: Q Q Q Q Q Q Q Q Q Q

10 Commercial/Multifamily Property Sales Volume Properties and Portfolios $5 Million and Greater $Billions Retail Office Industrial Apartment $323 billion $406 billion Q Q Q Q Q Q Q Q Q Q Q Q Q Q3 Source: Real Capital Analytics 10

11 Commercial/Multifamily Capitalization Rates Properties and Portfolios $5 Million and Greater 12% 10% 8% 6% 4% 2% Apartment Industrial Office Retail Total 0% 2001 Q Q Q Q Q Q Q Q Q Q Q Q Q Q3 Source: Real Capital Analytics 11

12 Office 150 Retail 100 Apartment Industrial Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q4 Property Prices Per Sq. Ft. (or $1000/unit) Properties and Portfolios $5 Million and Greater Source: Real Capital Analytics

13 Selected Year-over-year Contributions to Changes in Real Gross Domestic Product SAAR, $Billions Personal Consumption Government Pvt Nonresidential Fixed Investment Net Exports Pvt Residential Investment Q1:95 Q1:96 Q1:97 Q1:98 Q1:99 Q1:00 Q1:01 Q1:02 Q1:03 Q1:04 Q1:05 Q1:06 Q1:07 Source: Bureau of Economic Analysis 13

14 Indexed Median REIT/REOC Same Store Net Operating Income (NOI) by Property Focus 1999 NOI = Regional Mall Self-Storage Shopping Center Industrial Multi-Family Office Q3 Source: and SNL Financial, Charlottesville, VA , 14

15 Equity Residential REIT Same Store Results Fourth Quarter 2007 vs % -1% 0% 1% 2% 3% 4% 5% 6% Dallas/Ft. Worth Seattle/Tacoma San Francisco Bay Area Portland, OR Denver New York Metro Area Suburban Maryland Orange County Los Angeles San Diego New England (excluding Boston) DC Northern Virginia Jacksonville Phoenix Atlanta Inland Empire, CA Raleigh/Durham Boston Orlando South Florida % Change in NOI (bottom scale) % Change in Occupancy (top scale) Source: Equity Residential -8% -4% 0% 4% 8% 12% 16% 20% 24% 15

16 Month-over-month Change in Selected Office-demanding Industries Thousands of jobs, Seasonally adjusted Administrative & Waste Services Management of Companies & Enterprises Real Estate, Rental & Leasing Professional & Technical Services Finance & Insurance Services Information Services Jan 2001-Jan 2002-Jan 2003-Jan 2004-Jan 2005-Jan 2006-Jan 2007-Jan 2007-Jan Source: Bureau of Labor Statistics. 16

17 Year-over-year Change in Selected Retail Sales $Millions, Seasonally adjusted $5,000 $4,000 $3,000 Food & Beverage Stores $2,000 $1,000 $0 General Merchandise Stores Furniture & Home Furnishing ($1,000) Building Materials, Garden Equipment & Supply Dealers ($2,000) 1995-Jan 1996-Jan 1997-Jan 1998-Jan 1999-Jan 2000-Jan 2001-Jan 2002-Jan 2003-Jan 2004-Jan 2005-Jan 2006-Jan 2007-Jan 2007-Jan Source: Census Bureau 17

18 Change in Number of Owner- and Renter-occupied Households, Year-over-year (additive) Thousands of households Change in owner-occupied households Change in renter-occupied households Household growth Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1 Source: Census Bureau and MBA 18

19 Top-ten and Bottom-ten States in Terms of Percent Change in Population, July 2006 July 2007 Nevada Arizona Utah Idaho Georgia North Carolina Texas Colorado Wyoming South Carolina 2.9% 2.8% 2.6% 2.4% 2.2% 2.2% 2.1% 2.0% 2.0% 1.8% Massachusetts New Jersey Connecticut West Virginia Maine New York Vermont Ohio Michigan Rhode Island -0.3% -0.4% 0.2% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% 0.0% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Source: Census Bureau and Bureau of Labor Statistics 19

20 Commercial/Multifamily Bond and Mortgage Performance 20

21 Commercial/Multifamily Mortgage Delinquency Rates Among Major Investor Groups NOTE: Delinquency rates shown are NOT comparable between investor groups. These rates show how performance of loans for each investor groups has varied over time, but cannot be used to compare one investor group to another. 14.0% 12.0% 10.0% CMBS (30+ days and REO) Life Companies (60+ days) Fannie Mae* (60+ days) Freddie Mac (60+ days) Banks & Thrifts (90+ days) 8.0% 6.0% 4.0% 2.0% 0.0% Mar-90 Mar-91 Mar-92 Mar-93 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Sources: Wachovia Capital Markets, LLC and Intex Solutions, Inc., American Council of Life Insurers, Fannie Mae, Freddie Mac, OFHEO and Federal Deposit Insurance Corporation. Data are available for life companies and FDIC-insured banks and thrifts since 1990 and 1991, Fannie Mae and Freddie Mac since 1996 and CMBS since December figures are not available from Fannie Mae for the years 2000 to Figures for November are used instead. Prior to 1996, bank and thrift figures are for banks only and also include construction and land loans. 21

22 Historical (Generally Ten-year**) Range of Commercial/Multifamily Mortgage Delinquency Rates Among Major Investor Groups NOTE: Delinquency rates shown are NOT comparable between investor groups. These rates show how performance of loans for each investor groups has varied over time, but cannot be used to compare one investor group to another. 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% Historical range Latest 0.0% CMBS (30+ days and REO) Life Companies (60+ days) Fannie Mae* (60+ days) Freddie Mac (60+ days) Sources: Wachovia Capital Markets, LLC and Intex Solutions, Inc., American Council of Life Insurers, Fannie Mae, Freddie Mac, OFHEO and Federal Deposit Insurance Corporation. Data are for the period 1996 to present, except CMBS which is from 1997 to present. December figures are not available from Fannie Mae for the years 2000 to Figures for November are used instead. Banks & Thrifts (90+ days) 22

23 Percent of Total Tranches Outstanding Upgraded/Downgraded by Fitch Ratings, by Year of Action and Asset Type Upgrade Downgrade ABS RMBS CMBS Source: Fitch Ratings 23

24 Looking Ahead 24

25 MBA Economic Forecast February 15, 2008 Source: 25

26 Contact Information & MBA Resources 1919 Pennsylvania Ave - Washington, DC MBA homepage: MBA research page: Research Institute for Housing America: Home Loan Learning Center: MBA Newslink: 26