Odd Lots The Father Of CMBS Says We’re In ‘Uncharted Territory’ When It Comes To Valuing Real Estate
Aug 27, 2020
Ethan Penner, Managing Partner of Mosaic Real Estate Partners and widely recognized as the father of Commercial Mortgage-Backed Securities, discusses the volatile state of the real estate market. He highlights the stark divide between thriving suburban markets and struggling urban commercial spaces. Penner reflects on historical crises and draws parallels to current challenges, emphasizing how shifts in remote work and economic uncertainty are reshaping valuation dynamics. He also explores the interplay between buyers and sellers amidst evolving financial landscapes.
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1990s vs. 2020s Real Estate Crises
- The early 1990s real estate crisis stemmed from lenders abandoning the industry.
- This created a capital shortage, unlike today's uncertainty-driven crisis.
Pre-CMBS Real Estate Lending
- Pre-1990s real estate lending lacked public market influence and financial governance.
- This led to bizarre pricing, risky lending practices, and ultimately, the crisis.
CMBS: Opportunity and Flaws
- CMBS brought capital to a desperate market, but its flaws emerge during downturns.
- These flaws include fragmented loan ownership and difficulties in renegotiation.