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Capital Markets Roundtable

The Capital Markets Roundtable held on February 8, 2008, in St. Petersburg Beach, Florida, addressed pressing economic conditions as GDP showed minimal growth and nonfarm payrolls declined for the first time since 2003. With inflation rising to 2.7% and the Federal Reserve cutting rates significantly, concerns about a potential recession were prominent. The conference explored the implications for the housing market, noting a significant drop in existing home sales and median home prices. Experts discussed the carryover effects on the apartment sector and commercial real estate amidst the credit crunch.

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Capital Markets Roundtable

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  1. Capital Markets Roundtable Historic Tax Credit Developer’s Conference Friday, February 8, 2008 St. Petersburg Beach, Florida

  2. General Economic Conditions • GDP slows to 0.6% in fourth quarter – nearly flat • January 2008 nonfarm payrolls decline for the first time since August 2003 • Inflation rises at a 2.7% annual rate in the fourth quarter, the fastest pace of inflation in six quarters

  3. General Economic Conditions • The Fed has now cut rates five times by a cumulative 2.25 percentage points. • Many economists think we face a potentially serious recession • The stimulus package – too little, too late?

  4. Markets • Bursting Bubbles • Existing home sales at lowest levels in 9 years – down 13%. • Home prices – National median price declines for the first time in the 40-year history of survey. No hard data before that but probably the first decline since the Great Depression. • What does this mean for the apartment sector? Commercial real estate in general?

  5. The Subprime Debacle(reported write-downs since Q3 2007)

  6. The Subprime Debacle • Many of these companies are investors in and lenders to HTC deals. • Will demand be affected? • How about pricing, terms and underwriting?

  7. The Credit Crunch • How has it affected commercial real estate? • Tighter underwriting • What property types are lenders/investors staying away from? What geographic areas?

  8. How rough is it out there?

  9. Thank You John H. Cornell III, Esq. Nixon Peabody LLP 100 Summer Street Boston, MA 02110 • (617) 345-1127; jcornell@nixonpeabody.com

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