The US Market Review provided a high powered delivery by Bill Krauch, Managing Director of ING Clarion Partners, Dennis P. Yeskey, National Director, Real Estate Capital Markets, Deloitte Consulting LLP, Victor B. Macfarlane, Chairman & CEO MacFarlane Partners, and Janice Stanton, Senior Managing Director, Cushman & Wakefield.

The Flight to Simplicity was moderated by Todd E. Everett, Managing Director – Head of Fixed Income, Principal Real Estate Investors, and paneled by Andrew S. Cooper, Managing Director, Westdeutsche ImmobilienBank AG, Kim S. Diamond, Managing Director, Standard & Poor’s, and Kara McShane, Managing Director, Morgan Stanley.
On the question of what keeps you up at night Kara McShane responded, “Besides losing my job, it’s how we replace the CMBS market. It was a very efficient way to distribute market risk.”
About managing the risk Andrew Cooper replied, “There’s $300 billion waiting on the sidelines; CMBS will be back sooner than people expect, but maybe in another format.” Kim Diamond added, “What we’re facing is a lack of investors’ trust. Investors seem less concerned on losses and more on ratings movements.”

Challenges of the US Residential Market was moderated by C. MacLaine Kenan, Executive Director, Arcapita, with panelists Millie Cassidy, President, Sentinel Real Estate Corporation, Sylvia I. Gross, Director of Capital Markets, Real Estate Capital Partners, and Kevin O’Shea, Senior Vice President of Investment Management, AvalonBay Communities, Inc.
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The consensus was that there is no single residential market, with every area having its own unique characteristics. “The housing market is a market of markets.”

Dawn in the East was moderated by Ian D. Hawksworth, Managing Director, Capital Counties and Executive Director, Liberty International. The panelists were Thomas Etzel, Managing Director, BHF-Bank, Frankfurt and Managing Director, BHF Private Equity & BHF Real Estate, Lee Timmins, Senior Vice President, Hines, and Robert Sztemberg, HSH Nordbank AG
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Regarding the investment game in CEE and Russia, Lee Timmins said, “Most Western European markets are overpriced.”
Thomas Etzel added, “The Baltics represent a good market with strong fundamentals, but it’s a very small market. If you’re looking to invest €500 million that’s not possible. Currently there’s an 8% vacancy in offices with a 7-10% growth outlook. They’re members of the EU and a great hub to Russia and Asia. This is where you want to invest €20-€50 million, and the Scandinavian banks are willing to fulfill 60% LTV at a spread of 200 to 400 basis points.”
Robert Sztemberg: “Don’t rush in to spend your money in core CEE. Take your time and find a local partner, give them the responsibility, and definitely don’t invest more than €500 million. The demographics are great, but transportation and infrastructure can become and issue.”
Lee Timmins: “It’s hard to find a capable contactor in Russia. More and more I use Turkish contractors; they have 15,000 laborers from Turkey in Russia.” He added, “Equity players underestimate the development risk in Russia, especially in Moscow, and overestimate the ownership returns.”
Thomas Etzel: “There’s a low market risk in the Baltics, but a small market size.”
Robert Sztemberg: “It’s a difficult market for institutional investors. Residential markets in CEE and Russia are dominated by ownership.” He added, “Keep away from Poland, the Czech Republic, and Romania.”
Lee Timmins: “The credit crunch has impacted the lending capacity for warehousing in Russia. The slowdown in supply has led to an increase in rents. But beware the bureaucracy.”