Housing & Real Estate

Each week the ranks swell of those who believe that the U.S. economy is on the road to recovery. However, even amid the growing optimism, it is generally agreed that the greatest obstacle to robust recovery is the still-crippled housing market. The public dialogue about "solutions" has focused on the merits and flaws of specific proposals, such as foreclosure relief and mortgage modification programs. Meanwhile, the debate over the future role of government sponsored enterprises (GSEs) and, indeed, whether they should have a role, in the housing market cycles from front- to back-page news. Concerned observers can be forgiven for not clearly understanding that both sets of policy discussions are intertwined. Discussions about the housing market also lack a clear description of the actual context in which specific policies are likely to succeed or fail. We propose starting by asking "How much of a housing market, when we have 'fully recovered,' are we talking about?" Essentially, we need a clear idea of the nature and size of the housing market "target" that policies should "hit." This paper addresses that question by asking and then answering two related questions: (1) How big will demand for home mortgage financing be when the economy returns to its long-run trend growth? (2) What roles will the major credit providers likely play in fulfilling that demand?

Speakers: Fiona D'Silva, Managing Director, Kennedy Wilson Europe David Evans, Chair, London Office, Goodwin Procter Jonathan Goldstein, Deputy Chief Executive, Heron International Anthony Myers, Senior Managing Director, Real Estate Group, Blackstone Group Moderator: Francine Lacqua, Anchor and Editor-at-Large, Bloomberg Television. With patchy economic conditions in the Western world, real estate is segmenting into the recovery haves and have-nots. How far can prices run up in places like London, New York, San Francisco? How low can they go in Spain and Italy, for example? It seems like much of the world is still considered unsafe, and the same goes for borrowers: There's the elite, and there's the rest. Is it time for the second tier to have its day, or is that day further away than ever? Our panel of experts and investors will delve into these and other trends under construction in the U.S., Europe, Asia and points beyond. Owners of commercial properties are enjoying the fresh demand, but their optimism has to be tempered by sluggish GDPs and the threat of rising rates and waning liquidity. They're also coping with the new tenant culture. Extravagance is out; doing more with less is in. E-commerce, telecommuting and constrained hiring mean firms need less space, but they want their digs wired up and as green as possible. Are hedge and private equity funds still moving into the sector? Have conditions evolved enough to spark a CMBS comeback? And with re-regulation a work in progress, what's the next shoe to drop?

In "A Pragmatic Plan for Housing Finance Reform," the authors articulate a vision and core principles without prescribing detailed legislative imperatives. They argue that continued flexibility consistent with basic principles will be essential as a new housing finance system develops in an environment of significant demographic and economic volatility. When considering how a future housing finance system should operate, the authors emphasize the importance of diverse sources of mortgage funding; participation in the system by lending institutions of all sizes; and the need for explicit, paid-for government guarantees to cover catastrophic losses. Recognizing that ensuring access and affordabilty in a new housing finance system is essential to a vibrant economy, the paper's authors also recommend the establishment of a Market Access Fund (MAF). Among the components included in the MAF: a Research and Development Fund to pilot testing of innovate products that expand the market for sustainable homeownership; a Credit Support Fund to increase access for sustainable homeownership and the rental market; and two funds that were created in 2008 to be funded by Fannie Mae and Freddie Mac, the Capital Magnet Fund, which would attract private capital investment in affordable housing and community development, and the National Housing Trust Fund, a block grant program to preserve the supply of rental housing for extremely low-income families. The authors called for an end to Fannie Mae and Freddie Mac, recommending that the remaining assets to be sold to private investors to help repay taxpayers for backing these institutions. However, the authors do see a continued role for the Federal Housing Administration (FHA), which primarily support first time homebuyers and affordable rental housing. That mission would be more explicitly defined in the author's proposal; under the new system, the FHA's share of the single family market would fall back to historical norms of 10-12% of mortgage originations. That is in contrast to today's share, which is at least 20%. The paper does not address changes to the Federal Home Loan Bank System.

Speakers: Peter Lowy, Co-CEO, Westfield Group William McMorrow, Chairman and CEO, Kennedy Wilson Nicholas Schorsch, Chairman and CEO, American Realty Capital Barry Sternlicht, Chairman and CEO, Starwood Capital Group Sam Zell, Chairman, Equity Group Investments Moderator: Lewis Feldman, Partner and Los Angeles Chair, Goodwin Procter LLP. The hallways of the Beverly Hilton are a blur of activity during the Global Conference Panel Detail: Monday, April 29, 2013 9:30 AM - 10:30 AM Global Opportunities in Commercial Real Estate Speakers: Peter Lowy, Co-CEO, Westfield Group William McMorrow, Chairman and CEO, Kennedy Wilson Nicholas Schorsch, Chairman and CEO, American Realty Capital Barry Sternlicht, Chairman and CEO, Starwood Capital Group Sam Zell, Chairman, Equity Group Investments Moderator: Lewis Feldman, Partner and Los Angeles Chair, Goodwin Procter LLP Global property markets are recovering unevenly by geography and asset class. Many observers felt that commercial real estate was the next shoe to drop after the subprime housing crisis, but it has outperformed most investment options. Where around the globe are the best investment opportunities - Asia, where growth has been strong, or the eurozone while it is enduring a rough patch? What's the optimal combination of asset class (commercial, retail, industrial, multifamily, hospitality or something else) and geography? Asia has many enthusiasts but in a recent survey of foreign investors, 60 percent identified the U.S. as offering the best potential for appreciation. Indeed, capital availability for existing properties appears to be improving in the U.S., but other regions face challenges. What are the leading sources of capital? Is debt or equity the better approach? What about capital access for new construction? Our panel of experts will sift through the data and discuss their strategies.

Speakers: Stephen J. Cloobeck, Chairman and CEO, Diamond Resorts International Jonathan Goldstein, Deputy Chief Executive, Heron International Mary Ricks, President and CEO, Kennedy Wilson Europe Barry Sternlicht, Chairman and CEO, Starwood Capital Group Moderator: Ed Hammond, Property Correspondent, Financial Times. While London, especially the City financial sector, remains far enough away from the ailing euro zone to maintain a vigorous property market, European real estate watchers worry about impaired assets piling up at Continental banks. Accordingly, the value gap is widening between prime properties in Europe and lower-quality holdings. Our expert panelists will forecast trends and discuss strategies in a challenging environment. Across the developed world, central banks have aided real estate. Can their support be counted on going forward? What other regions have growth potential? Should investors train their sights on multi- or single-family properties, office or industrial? The U.S. is working through its foreclosure inventory, and apartments are hot. In China, will there be a hard or soft landing in real estate?