Top Takeaways: MBA CREF24 Conference

The MBA’s CREF24 conference was held at the Manchester Grand Hyatt Hotel in San Diego earlier this week. The sunny blue skies were out, the energy levels were high, and the overall mood was positive with 2023 in the rearview mirror. Slatt Capital brought our full production team and held 60+ lender meetings in our space. The following are our takeaways from the seminal commercial real estate finance event.

• A 29% increase in originations is expected for 2024—a positive sentiment following a 25% decline in originations from Q4-2022 to Q4-2023.
• Some are hopeful there could be as many as 6 cuts starting as early as March, while others think the more realistic estimate is that the Fed will implement 4 interest rate cuts starting in June.
• Creativity of debt structure in 2024 may be key to transacting, and there could be opportunities for more flexible debt funds to step into the market.
• One challenge facing the real estate market is the “noise” of the headlines, which can often over-generalize information about specific property types (i.e., office) or markets.
• With banks pulling back and tightening their lending, it creates an opportunity for CMBS to return.
• 20% of all outstanding commercial real estate debt is coming due in 2024, with 20-25% of that debt consisting of office loans.
• Property insurance was a dominant factor in many discussions as premium increases continue to be seen and carriers continue to pull out of certain markets altogether. Some think that premiums will continue to increase moving into 2024, while others were more hopeful that we’ll start to see a stabilizing of those increases.
• Many CMBS loans were structured such that leases were coterminous with the loan’s maturity, and that can be a challenge when looking for refinance options.
• $29.5B in urban office loans mature between December 2023 and Q3-2024, so those will be loans to watch and start to focus on early since there is a lot of liquidity in the market, and refinancing with new capital may be easier than trying to manage a workout.
• If a CMBS loan does go into a workout scenario, lenders will be hyper-focused on sponsor strength, property cash flow and property condition, among other factors, but again, each loan will be considered on a case-by-case basis given that each loan is unique.