1
1:30 PM – 2:45 PM
, 2011
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Welcome and Introduction
ModeratorKelly Wrenn
PanelistsStacey Berger
Andrew Hundertmark
Thomas Nealon
Jenna Unell
Partner, Ballard Spahr LLP Washington, DC
Executive Vice President, Midland Loan Services, Inc. Washington, DC
Senior Vice President, CWCapital Asset Management LLCBaltimore, MD
Vice Chairman/General Counsel, LNR Partners, LLC.Miami, FL
Senior Managing Director/General Counsel, C-III Asset Management LLCDallas, TX
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3
FROTHY 2007
4
TSUNAMI – 2009 and 2010
5
2011 – HAS THE SNAKE FULLY DIGESTED THE RAT?
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Office30.22%
Retail29.98%
Multifamily14.24%
Industrial4.79%
Other11.35%
Lodging9.42%
CMBS Market Composition
Source: TREPP LLC, Market Snapshot, October 24, 2011
As of September 2011, the total amount of outstanding CMBS
loans was approximately $618 billion.
7
There is currently a 9.63% delinquency rate for CMBS real
estate loans nationwide.
Source: TREPP LLC, Market Snapshot, October 24, 2011
Commercial R/E Loan Delinquency Rates
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
2005 2006 2007 2008 2009 2010 2011
Del
inqu
ency
Rat
e
8
Loans in Special Servicing
Approximately 13% or 4,400 of CMBS real estate loans are in Special Servicing, representing a total loan balance of
nearly $82 billion.
UP
B (
$b
illi
on
)
% o
f to
tal
CM
BS
un
ive
rse
Source: Fitch Ratings, CMBS 2Q2010 Servicing Update, August 11, 2010; TREPP LLC, Market Snapshot, October 24, 2011
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010 Q2 20110
2
4
6
8
10
12
14
16
2005
2006
2007
2008
Q4
2009
Q4
2010
Q4
2011 Q2
9
Types of Collateral in Special Servicing
Office projects represent 29% of current Special Servicing
volume — up almost 17% from year-end 2009.
Source: TREPP LLC, Market Snapshot, October 24, 2011
Office
Multifamily
Retail
Lodging
Other
Industrial
5% 10% 15% 20% 25% 30% 35%
29.0%
20.1%
21.1%
14.3%
10.9%
4.7%
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Underlying Collateral in Special Servicing:Geographic Distribution
3.0%
24.6%
19.2%3.1%
7.4%
10.4%2.9%11.1%
15.0%
Collateral outside US: 0.3%
Source: TREPP LLC, Market Snapshot, October 24, 2011
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REO Properties Held by Special Servicers: Geographic Distribution
Source: TREPP LLC, Market Snapshot October 24, 2011
3.5%
8.6%
23.0%5.0%
14.5%
11.5%1.8%16.0%
15.9%
Properties outside US: 0.2%Approx. Count: 980 REO
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Types of REO Properties in Special Servicing
Source: TREPP LLC, Market Snapshot October 24, 2011
Office
Multifamily
Retail
Lodging
Other
Industrial
5% 10% 15% 20% 25% 30% 35%
24.5%
22.6%
32.6%
12.3%
4.4%
3.6%
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CMBS Loan Maturity Timeline
Nearly $559 billion (91%) of outstanding CMBS
real estate loans will mature within the next 6 years.
Source: TREPP LLC, Market Snapshot, October 24, 2011
Ou
tsta
nd
ing
Loan
Bala
nce
(bil
lion
s)
0
20
40
60
80
100
120
140
2012 2013 2014 2015 2016 2017 2018Office Retail MultifamilyLodging industrial Other
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$50 billion
$100 billion
$150 billion
$200 billion
$250 billion
CMBS New Issuance
In the first three quarters of 2011, there was $26.7 billion of new CMBS issuance — more than double the 2010 total.
Source: TREPP LLC, Market Snapshot, October 24, 2011
2011
15
The Spectre of Long-Term Unemployment
There are 1.0 million additional “discouraged workers”
who have given up on looking for employment.
Long-term unemployment (6 months+) has grown by almost
400% — from 1.3 million people in 2007 to
6.2 million people in 2011.
In August 2011, there are 4.7 workers for every available job
in the U.S.; before the Great Recession (December 2007) there were 1.5.
Source: U.S. Bureau of Labor Statistics, September 2011
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The Spectre of Long-Term Distressed Housing
About 16.2 million borrowers–or nearly 28% of all homeowners with a mortgage–have homes which are
“underwater.”(Nevada, Arizona, Florida, Michigan, California)
The U.S. has 10 million vacant single family homes and an additional 18 million single family homes are now
rented.
Sources: Zillow Inc., October 24, 2011; CoreLogic, October 24, 2011; Fannie Mae, January 25, 2011