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A wide ranging panel discussion will examine the strategic deployment of capital and asset allocation from the perspective of banks, life insurers, capital markets, and financial services corporations. The participants will offer their views from different points on the compass as they comment on the current capital and credit market environment; what they foresee in 2011 and beyond; what risks and opportunities are emerging at this time; in what markets and in what form would they favour deploying their capital; and where the real estate asset class fits relative to all their other investment opportunities for the year ahead. With relative yields on commercial mortgage bonds falling, do investors believe that the worst is over for the debt? Is the CMBS market posed to make a comeback?
Moderators:
Derek Dermott, Managing Director, BMO Capital Markets Real Estate Group
Cathal O'Connor, Executive Vice President & CFO, The Cadillac Fairview Corporation Limited
Panel:
Hugh Macdonell, Managing Director, Merchant Banking, Morgan Stanley
Sandy McIntyre, President & CIO, Sentry Investments
Allan Kimberley, Vice Chairman & Managing Director, Investment Banking Real Estate, CIBC World Markets Inc.
Moray Tawse, Vice President, Investments, First National Financial LP
Darrell Wheeler, Senior Managing Director, Amherst Securities Group |
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SESSION A1
LENDERS' ROUNDTABLE: THE MARKET FOR MEDIUM AND LARGER LOANS AND MAJOR CENTRES
The panel will examine the changes in underwriting practices and deployment of debt capital in the Canadian market. Most commercial real estate lenders are feeling safer today than they did a few years ago. But they are also facing stronger competitive environments as allocations for 2011 have increased in some instances from 25% to 40%, amortizations from 20 to 25 years, and LTV ratios from 60% to 70% levels. The discussion will open with a brief overview of a national survey of Canadian commercial mortgage market activity. This session will then focus on what borrowers should expect to see in 2011 in major markets across Canada. Some of the additional questions that will be examined: Who will be the major providers of debt in Canada and what will they be looking for? How will the strategies of banks, insurance companies, pension funds and other institutions vary from those of private sources of debt capital? How are lenders evaluating a deal in today’s market? How is risk being priced now? What is happening with loan spreads, amortization periods, loan to value ratios, and recourse financing? What property classes are lenders avoiding, reducing exposure to, or increasing pricing for?
Moderator:
Mark Achtemichuk, Director, Mortgage Valuation, Canadian Mortgage Loan Services Limited
Panel to include:
Paul Chin, Vice President & Head of Real Estate Lending, Otéra Capital
Ron Findley, Assistant Vice President & Regional Director, The Great-West Life Assurance Company
Mark Hart, Vice President, CIBC Commercial Mortgages Inc.
Audrey Howe, President, ACM Advisors Ltd.
Andrew Huntley, Vice President, Mortgage Investments, AIMCo
SESSION A2
GLOBAL CAPITAL FLOWS & LENDING TRENDS: IS CANADA ON INTERNATIONAL RADAR SCREENS? IS THE U.S. RECOVERY NOW PICKING UP MUCH MORE STEAM?
The last twelve months has seen a major swing in global capital flows, from the stagnant market of Q4 2008 to vibrant public capital raising and recapitalizations and the emergence of new forms of private capital during 2010. As foreign lenders return to the commercial mortgage markets and foreign investors deploy their capital, how appealing are Canadian real estate properties for them? Among the other questions that this panel will address: What are you seeing now in the capital and financial markets outside of Canada? Is the recovery now accelerating in the U.S. to the point of being a “game changer”? How does that compare with the environment in Western Europe? What will become of all the fresh capital that is in search of yields and lower risks? Who will now be the players – old versus new? Where are they going to focus, how are they going to raise their financing, and what will be the structural form of their investments? How are these trends affecting the Canadian market? What is happening abroad that may come to Canada? What kind of underwriting could Canadian real estate owners expect to see from foreign sources entering our market?
Moderator:
Greg Kalil, Managing Partner, Brookfield Financial
Panel:
Russell Chaplin, CIO, Property, Aberdeen Asset Managment PLC
Carmin Di Fiore, Senior Vice President, Real Estate Banking, Bank of America Merrill Lynch
Christian Strauch, Managing Director, AL.I.NA KGAL Group
SESSION A3
HOW ARE REITs AND REOCs PERFORMING IN THIS MARKET? WHAT ARE INVESTORS’ EXPECTATIONS GOING FORWARD: SAFETY OR GROWTH?
As capital pours into Canadian REITs, these securitized entities are well capitalized, have balanced debt maturity profiles, and generally have high-quality assets, which are easier to refinance. Following the significant turbulence of 2008 that peaked in early 2009, REITs have raised billions of dollars for their war chests over the past twenty months and their unit values have roared back. Is this performance sustainable is now the question among investors and REIT management? Has the market discounted the future? What returns are unit holders, portfolio managers and analysts expecting? A few years ago, strong growth potential was a key criteria in selecting REITs. Then the criteria became safety in recent years. Who will be rewarded now going forward, e.g. those REITs and REOCs that are considered safe or those who are have strong growth prospects?
Moderator:
Stephen Sender, Managing Director, Industry Head, Scotia Capital Inc.
Panel:
Maria Berlettano, Vice President & Director, J. Zechner Associates Inc.
Sam Damiani, Vice President & Director, Real Estate & Lodging Equity Research, TD Newcrest
Kevin Hall, Senior Portfolio Manager, Guardian Capital LP
Dennis Mitchell, Deputy Chief Investment Officer & Senior Portfolio Manager, Sentry Investments
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SESSION B1
WHAT ARE PENSION FUNDS AND OTHER INSTITUTIONAL INVESTORS FOCUSED ON IN 2011?
This session will examine the strategic appetite of pension funds and institutional investors for real estate in 2011. There is a considerable amount of speculation that REITs and private equity have significantly overtaken pension funds with respect to raising capital for deployment in real estate and in being the successful acquirers in most deals. But is that really the case? Given the upsurge in public equity markets over the past year, what have the implications been for the asset allocation strategies of pension funds and institutional investors? How do pension funds strategically determine the extent of their exposure to real estate? What impact does the search for yield have on asset allocation decisions? Will some Canadian funds be net sellers domestically while they continue to diversify internationally? What is their diversification model? What will smaller funds and other institutional investors likely to be doing?
Moderator:
Dan Giaquinto, Managing Director, RBC Capital Markets Real Estate Group
Panel:
Peter Ballon, Vice President, Head of Real Estate Investments - Americas, CPP Investment Board
Micheal Dal Bello, Senior Vice President, Real Estate, AIMCo
Bill Perkins, President, Redcliff Realty Advisors
Andrea Stephen, Executive Vice President, Investments, The Cadillac Fairview Corporation Limited
SESSION B2
MEETING THE DEMAND FOR SMALLER LOANS, SECONDARY MARKETS AND TIER TWO ASSETS
A significant part of the Canadian commercial mortgage market consists of properties that have financing needs in the range of $15 million or less. In some instances, these assets are found in secondary markets while, in other cases, they represent B or C class buildings in larger centres. This session will examine these opportunities in greater detail. Among the questions that will be examined: Who is lending at these levels, at what rates, with kind of underwriting criteria, and to whom? How is risk being priced for these smaller loans? What is happening with loan spreads, amortization periods, loan to value ratios, and recourse? Are smaller communities and other geographic areas a tougher sell in 2011 or are they being well served? What is the market for B and C class properties that are out of favour with major lenders? Does anyone have an interest in underperforming assets?
Moderator:
Steve McEwen, Partner, Montrose Mortgage Corporation
Panel:
Blake Cassidy, Managing Partner, Romspen Investment Corporation
Allan Jensen, Vice President, Commercial Services, Alterna Savings
Jeff Lastiwka, President & CEO, JayCap Financial Ltd.
Chris Sharp, Managing Director, Penmor Mortgage Capital Corporation
SESSION B3
THE CFO PERSPECTIVE: IS CHEAP DEBT AND EQUITY A TWO EDGE SWORD? WHAT ARE THEIR MAJOR ISSUES AS BORROWERS IN THIS MARKET?
This panel will look at the trends and issues related to raising debt, credit and capital from the borrowers’ perspectives. Among the questions that will be addressed: How much easier has it been to access the capital that you require in today’s market than a year ago? If so, then what have been the most significant changes? How much debt are you carrying, when does it roll over, and how will you likely refinance? What are the most key sources of capital that you are tapping? Who has the lowest cost of capital now? How strong is the growth in unsecured debt? Do you have any challenges with how underwriting is being done in today’s market and how lenders are pricing or trying to transfer risk? Do you sense that these are transitional measures or more structural? What about new acquisitions and development? How are they being financed? What information do various interests require from a valuation including management, purchasers, vendors, shareholders, auditors, lenders, etc? How does one determine value in today's market? Where is valuation heading going forward, e.g. GAAP vs IFRS? What else does a buyer, investor or seller need to understand?
Moderator:
Karen Weaver, Executive Vice President & CFO, First Capital Realty Inc.
Panel:
Glenn Hynes, CFO & Secretary, Crombie REIT
Bart Munn, CFO, Calloway REIT
Brady Welch, Partner, Slate Properties Inc.
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