The week of January 20 was a busy one. Not only did we have several reports going out of our shop, but I also had the opportunity to attend two different industry conferences on asset-backed securities and capital markets. The Structured Finance Industry Group (SFIG), collaborating with Information Management Network (IMN), put on an asset-backed securities conference in Las Vegas (ABS Vegas 2014). The sessions were very informative about the state of asset-backed securities and what is forecasted to be major issues for the industry in 2014. Arguably one of the major issues is that there seems to be a transition away from one industry group (American Securitization Forum, Inc.) toward another (SFIG/IMN), evidenced by approximately 5,000 attendees at ABS Vegas. What’s even more interesting is that this transition from one industry group being the most popular to the other one “taking over” occurred in a single year.

Later in the week, I flew to New York City for the Goodwin Procter/Columbia Business School Annual Real Estate Capital Markets Conference. It was held at the TimesCenter on January 24, 2014. The keynote speech was given by Mark Zandi, Chief Economist of Moody’s Analytics. Dr. Zandi offered his predictions for economic growth in 2014, which are stronger than the historical long-run average, due in part to his belief that private-sector balance sheets are likely doing as well as they have ever done. Another interesting point he made is that his research suggests that every single-family residential (SFR) housing start has a cumulative impact of four jobs. Also, every multi-family residential (MFR) housing start has an impact of two jobs.

In addition to Dr. Zandi’s speech, there were panels on real estate fundamentals and public and private capital markets. In particular, some of the panelists commented that the size of the commercial mortgage-backed securities (CMBS) market was $80 billion last year and that $100 billion is expected in 2014. Panelists also tended to agree that the spread that allows banks to make money will take on more of a Walmart model (low margins, high volume) because of margin compression. This year (2014) is expected to bring higher public share value, particularly in the industrial and office sectors. Expectations for generating public share value in 2014 are lowest for the retail and multi-family sectors.

Photo courtesy of Anatoliy Babiychuk.

– Clifford Lipscomb