Rolling into Summer with CREFC Roulette and the Biggest Takeaways from the June Conference

Dechert’s Jon Gaynor, Kate Mylod, Stewart McQueen and Matt Armstrong dive into the biggest conversations coming out of the 2024 CREFC Annual Conference in New York, including return-to-office trends, the “acceptance of reality” in the commercial real estate industry, what’s really happening in those “invitation only” sessions, and keynote speaker Trevor Noah’s poignant thoughts about airplane turbulence.

Show Notes

 THE CRED – Private Credit News and Insights

 Dechert Co-Chair Mark Thierfelder’s Milken Institute 2024 Global Conference “The Promise and Pitfalls of Private Equity” Panel

Transcript

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Hello and welcome. This is the Dechert 4 Real podcast, where we discuss current issues and trends in commercial real estate finance. We aim to bring market commentary about developments, updates you can use and hopefully a little bit of banter along the way. I'm Jon Gaynor, a counsel based in Dechert's Philadelphia office. In this special episode instead of our usual crew of Ella Smith and Sam Gilbert, we're being joined by our producers to discuss the annual cripsy conference held in New York at the Marriott Marquis in Times Square from Jun 10 through June 12 2024. Would each of you please introduce yourselves? Yes, thanks, Jon. Hi, I'm Stewart McQueen. I'm a partner in Dechert's Charlotte office and I lead our CMBS practice here at Dechert. Hey, Jon, Matt Armstrong, a partner in Dechert's New York office. I'm part of our securitization team. And my practice focuses on CRE CLOs, agency CMBS and SASB CMBS. And hello, everybody. I'm Kate Mylod, a partner in Dechert's New York office. I'm a member of our large loan origination team. And my practice focuses on subordinate debt, in particular, preferred equity investments, as well as distress and workout matters. Well, thanks, everybody. And before we dive into the substance of the conference, we have to get 4 Real with the hosts to break the ice. For this month, I'm taking inspiration from the keynote address at the CREFC Conference by Trevor Noah. So this month's question is, how do you describe what you do to your kids or your family? Stewart, do you want to go first? Yeah, I'll try to take that. For my children. It's one thing but I don't even think my wife fully understands what I do for a living. So I've tried to describe it to her many times. She just either doesn't care, you know, just accepts the fact that, you know, I do something that's complicated, and she wouldn't like doing it. But as far as my kids go, and I'm a girl dad, I have two daughters. They're now both teenagers. But I generally just tell them, I help people win money to other people and make that possible in the market. I used to tell them, because they could never understand what I did. I used to tell them I'm off to bring home the bacon. So they thought you were a butcher, initially. I don't know if they thought that. But they're probably in the same category of my mom, I'm sorry, my wife. My mother's a different story she'll never understand what I do. But my wife, and they probably just don't care. They just they just care that I actually leave the house to go to work, and then come home and see them. What about you, Matt? Well, I always tell my kids that I do homework for a living. And they kind of understand that and get that. And I'm just kidding. But not really, you know, we work a lot here. And you know, just constantly drafting documents sending documents out. But when I really get into it, I'll tell them that I work for a law firm, and I help clients securitize mortgage loans, I know the concept of securitization is likely lost on them. But describing it any other way really starts to become too complex. So I usually just leave it there. And Kate? So when my son was younger, I would tell him that I helped people buy and sell buildings. So Stewart, not dissimilar, maybe, from what you tell your daughters. And it would be really fun because we'd go into cities like New York and Boston. And I'd point out, you know, mom worked on that. Now that he's a teenager, and he does get it a little bit more, I'm able to talk to you about how I help people put deals together and how I help them take them apart. So the deals that we're putting together are around buildings. He is pretty jacked about that enough that he actually let me come into the parents talking about what they do to kids at school day, and he wasn't embarrassed the way he used to be. So I will take that as a high compliment. That's a win. That is totally a win. My kids are too young to remember the great financial crisis and way too young to watch The Big Short, which is my go to if I'm like explaining things to maybe my my mom or my family members. So when I'm talking to my kids about my job, I usually talk about it from a social perspective that I'm helping people negotiate and solve problems and reach agreements and compromise and really try to like just emphasize that element because that's about the you know, the age that they are. So you tell your kids you're making the world a better place. They hear me enough on my calls to know that you can't make the world a better place with that much yelling. I'm kidding. I'm kidding. But they seem to get it and my my older son will often like, you know, you answer your phone in a specific way when you're going to a conference call like, "Hi, I'm Jon Gaynor." Like he'll they'll run around and be like, "John Gaynor," you have to go do it and it's like, where are you getting the nerve to say this? So I hope that counts is getting 4 Real with the hosts. Before we jump into CREFC Roulette, we are recording this mostly live and in person. The conference is just about over. It was such an amazing time. One highlight for me was the Dechert party on Monday night, we had about 900 RSVPs. lines were incredibly long by the end. So a special shout out to all those folks who endured the line in order to get into the party. It was such an amazing time and our events team did their classically awesome job. We had it at T-Squared, a new venue co-owned by Justin Timberlake and Tiger Woods. They did not arrive. I kept my eyes out for them. But they couldn't get in. Yeah, right. So the lines were bad. How much should we have had to pay them for that? I'm wondering how much it would have increased the like, is there like a different budget category for that? What's the ROI on that sort of thing? I wonder? I don't think it pays off. we got to make sure we actually record it correctly. Right? Don't Don't call it legal expenses. Good point. So I thought the party was truly amazing and awesome. And thanks for everybody who were able to come out too that. Rick Jones likes to joke that he runs into like 900 of his closest friends, which I think is a good quip. So now with that aside, One thing Jonm, I will say, given the number of people that had trouble getting any because the lines were too long, we're already looking into booking Madison Square Garden next year. All right, you heard it here first, folks. So here we go with our classic CREFC Roulette. Kate, since this is your brainchild, do you mind explaining to the audience what it is we'll be doing? Sure. And I think this is our fourth time playing CREFCE if my memory serves me well. So what we do for the benefit of those of you in the audience is we have six or so topics derived from our observations at CREFC. We literally roll a dice, and we talk about whatever shows up on the die. So with that, I think, Jon, are you going to be our die master today? I will indeed. So I've got my 12 sided die and my dungeon master's guide if anybody gets that reference? A little Weezer. Yeah, exactly. So let me go. It looks like you're up first, Stewart with the mood and forecast. All right. Thank you, John. You know, last few of these we've done we've talked about mood whether people were cautiously optimistic or cautiously pessimistic. I think this year, I think the mood was kind of like we're settled in we are where we are. These are the cards we have to play with. And I'll quote or give a shout out to Sam Chang at Torchlight because I was talking to him yesterday. And he had a good phrase, he said, we're in a state of acceptance of reality, for our industry. Rates have somewhat stabilized, we know what we have. And then that we've seen an uptick in volume, especially in the SASB space. 32 billion this year, already more than what it was last year for full year. A lot of that may be driven by the election uncertainty, you know, people bringing the demand forward, because not only do we not know who's going to be in the White House, the Congress is up for grabs too, so that any combination of Republicans Democrats controlling can happen. So everyone and no one knows what that means. So I really enjoyed the panel on the first day, "Leverage Labyrinth" moderated by our very own Laura Swihart. But they just spent some time talking about the various strategies and and products out there. And I think there was an agreement that we need the CRE CLO volume to come back. It's a good tool for a lot of our our clients, a good tool for the market, it's a good tool for investors. So hopefully we start to see more volume in that space. I think the the pickup and warehouse activity actually bodes well for forward-looking CRE CLO pipeline. One other takeaway from the conference for me is that sustainability continues to be a hot topic. CREFC actually dedicated an entire day to it this year. Instead of just one or two sessions it was it was all day today, Wednesday. But it continues to be a focus for our clients and the industry as a whole and we continue here at Dechert to be focused on it. A highlight today, too, was Jason Rozes' moderated panel"Green is the New Gold" which, startling takeaway, these green loans actually make a lot of money for the people who do them. So talk to your your favorite Dechert sustainability counsel if you want to learn more. Stewart I'm going back to what one of your buddies said about like, "welcome to the current reality," or whatever it is. Acceptance of reality. Acceptance of reality, you know, the tenor of this year's June conference, I thought was overall net neutral. People were sort of not even a resigned acceptance, I think there's just the, you know, the coexistence with the degree of distress and uncertainty and the realities of office. But then for the first time with what you're saying, like about sustainability, it's like people are starting to look around the corner a bit and figure out how to do new business in this market. So that's why I say it's a net neutral, there was enough uptick and still enough, you know, same old, same old, I heard a lot of people feel that we're on an upward trajectory. And then we'll be in a really good spot three to five years. We're certainly feeling it here. That just feels like so long from now, though, three to five years, right. It'll be right around the corner. Yeah, it feels like we've settled in to the higher for longer that the Fed was initially coming out with. I remember, at the beginning, it didn't seem like any market participants really believed the Fed would hold rates higher for longer. And all the borrowers were trying not to transact if they didn't need to. Now it seems like those borrowers are coming to market, they're transacting now. Rates, while higher are not historically high. So I think that's why we're seeing more. And like you said, Stewart, the election uncertainty is out there. And there are lenders making loans now. And if you're a borrower, maybe it does make sense to come to market, get your loan now. And then you don't have to deal with that election uncertainty. Or the fallout, the ramifications, whatever they may be. Okay, let's move on to our next topic. Let's see what it is. All right, Kate, we're up with you with, "Where's the distress?" You know, as I was just saying to Stewart, I did think the tenor of the conference was net neutral. But that also indicates that we still are coexisting with a certain amount of distress, if not still a high amount of distress in our marketplace. What kind of five things that really stuck out to me around distress. And we've talked about here on our podcast before we've had, you know, our colleagues Laura Ciabarra and Matt Fischer to talk about how we're, you're sort of seeing it play out from an enforcement or lender's perspective, we're also talking about how it plays out as it works its way through our structured finance markets. But going back to that overall sense of we're living with this. Whether, it's that, you know, general acceptance, you know, you can say office now, it's not a totally shunned word, you know, people might kind of roll their eyes because office is so obvious. But there is just this sense of coexisting with this degree of distress. The second point is people still do see office as a big problem, but the focus is shifting off of all office now that we are well into our "return to work," people feel positive about that Class A trophy office in the major cities. The concern remains with the secondary and tertiary markets, and with the Class B office stock, what people have also started to talk more about, and I'm hearing this anecdotally and also heard it come up on a couple of different panels is the metric of tracking when people are in the office. Like people love to, you know, complain about it when they might have a long commute, and they're talking to their colleagues or they're talking to their family. But those numbers are actually meaning something in our real estate marketplace. When you say, All right, we know that we've got you know, 80% of where we were pre-COVID coming in on Tuesday, Wednesdays Thursdays with Wednesday showing the high spike, we know we've got a nice uptick in people coming back on Mondays and then Friday still continued to be nobody being in the office. People are now able to focus on what that means to thinking of a city like New York, the ground floor, retail tenants, the lunch shops, places where you pick up a, you know, an article of clothing because it started raining and you weren't prepared. You know, all of that gets impacted. So people are starting to factor in and talk more about that metric of actually being in the office. That third thing that popped up in the nature of distress was continued conversation around multifamily. And some of the struggles that we're seeing with that particular asset class. You know, it was so hot for so long, and so many people jumped in on it. And you know, it's certainly not the darling that it once was, you know, notwithstanding the fact that we are seeing something start to hold and stabilize in the market family asset class, but we're still not seeing rents catch up to where those increased operating costs still tend to be. That's interesting, Kate. Would you say that when it comes to distress that the market has accepted the current reality? That distress is here? I didn't hear any talk about, as we have in past conferences, about have we reached the bottom? I mean, is this the worst or is the worst yet to come? I didn't hear that at all. I think that's a great observation, Stewart. You know, I didn't hear that at all, either. And anecdotally, when you talk to people about what's in their book right now, you know, whether you're on the service provider side like we are as attorneys, or you're sort of on the generation side, you know, people are carrying kind of like maybe half new origination stuff, and then half asset management stuff. And of that asset management stuff, which I'm using as a large umbrella term, you've got anywhere from enforcement on one end of the spectrum to, you know, both a lender and a borrower playing hot potato with an asset because they don't want it back. I think that, you know, these are just realities that people are now coexisting with. And I think there's also that other background sense of this is going to flush itself out of the system in some way, shape, or form. And what I wanted to end on in thinking about distress conversations at the conference, was more of an uptick where it was characterized by a couple of different panel speakers in a couple of different ways. But the the evolutionary aspect of what our real estate industry is. Five, six years ago, death of the mall, retail was the ugly redheaded stepchild. E-commerce had came in and really knocked it down. Now we see a really nice resurgence in retail. And it's doing really well in a lot of investors' portfolios. And that's because retail has evolved. It's been reimagined, we've accepted that e-commerce is here to stay. But we've also found a new way to use the retail spaces, and it has shifted as human behavior has shifted. And I heard a couple of panel people say we're in the middle of watching that happen to office as well, it doesn't mean that every office space is going to be converted to multifamily. But it means that as our culture changes, our real estate needs are going to trail. But eventually they're going to catch up. That's very interesting, Kate, and it's good observations. I think, from our perspective, we have been fielding more and more calls lately on non performing loan transactions like whether to securitization or warehouse line, and there was some talk at the conference about we call it NPLs, nice acronym, that there is some energy and appetite for these products going forward, both from an investor perspective and consumer perspective and a provider perspective. Yeah, when will we actually see them, Stewart? We dusted off those documents a year ago, everybody was all amped up, they all started raising money. And I don't think we've seen the first NPL deal hit. There's been some NPL warehouses. There have? Definitely. You guys are talking about, like NPL, securitizations, right? Well, like I always go back to something I've said before on this podcast, somebody is going to figure out how to make a boatload of money off of this, right? But I agree with Matt, either I'm not seeing it or it's not happening yet. But I do think that there's, Stewart to your point, you know, there is opportunity around non-performing assets. It might not be totally in the securitization or the warehouse space. But I think there are lots of trades going on of paper, among individual investors utilizing back leverage, maybe, maybe not,to opportunistically get something at a discount or get something in a loan to own. There are opportunities up and down the chain. There are operators out there that are well positioned that want to come in and provide rescue capital to some of these sponsors that own these properties. I mean, there are lenders who want to provide financing, and then that there's the capital markets, the NPL securitizations, we can, you know, we can find the capital out there to help this along. It really just comes down to the asset owners themselves, realizing that they need to accept lower prices than they were before to make those deals really work out like they did at least last time. I remember when we had Laura Swihart and Matt Fischer on they were Laura was saying that people were getting these assets at 20 cents on the dollar, which is not where the owners are right now. But they are going to get closer to that as reality really sets in. So I'm looking forward. All right, let's go on to our next topic. Let me roll again. All right, we are up with loan origination trends with Matt. All right. So this year, we've seen a bit of a transition in the type of loans that are being originated for securitization. It used to be that conduit would be 10 year fixed rate loans. And now, because of the higher short term interest rates, I think a lot of borrowers have switched over to wanting five year fixed rate loans. And that was a product that was largely developed over the last year or so. And then, you know, people probably thought there was going to be a few five year fixed rate conduit deals and then it would fizzle out, but now it's turned into ... I don't have any stats on it, but it's probably that there's more five year fixed rate conduit than 10 year fixed rate conduit. Or they're alternating one after the other, so it's probably around 50%. So that's a major development that's occurred this year. Freddie Mac was on one of the panels, and someone from there gave a stat. And they said 65% of their issuance this year has been five year fixed rate loans. 2% has been floating rate loans. And the rest is, you know, seven year fixed, 10-year fixed or other types of loans, like tells or other products that they have. So it just shows that even on the agency side, that now the dominant type of loan that they have, there is five year fixed. And I think that's because borrowers, they don't want to get into a long term loan, while interest rates are relatively high. They want to be able to, you know, refi in a few years, so five years out at hopefully lower rates, and they just don't want to lock themselves in with a higher 10 year rate right now. And they also don't want floating rate, because floating rate, we have a very inverted yield curve right now. And you know, SOFR is up at 532. And is much higher than a five year fixed rate loan. So borrowers right now do not want floating rate. They want fixed rate, but they want their fixed rate loans to be short term. So that's where we're seeing the demand now. And it's really kind of shifted the types of securitized products that we're seeing this year. Another big thing to mention is the SASB loan issuance this year. So SASB loans, I think Stewart gave out the stat that we heard earlier, that there's been $32 billion worth of SASB issuance just in the first half of 2024 alone. Yeah, that's a lot of issuance in the SASB space. So for these really big trophy properties, or these big industrial portfolios, which I think we've been seeing a lot of being securitized, banks are willing to lend against it, and investors are willing to invest in that. And so that area has been doing really well. The last thing that I'll note is, you know, in the CRE CLO space we've been seeing very muted origination, there hasn't been much and people are wondering, you know, why is that? Is it something wrong with CRE CLOs or what's going on there? And what I think it is, is I think that, you know, CRE CLOs are largely floating rate product. And so with floating rates right now, with the inverted yield curve, with floating rates higher than the fixed rates, investors are not going that direction. So if the borrower has a loan that stabilized, they're obviously going to go, you know, five year conduit now that that's an option. But I think as the yield curve de-inverts, which I think people are expecting to occur, you know, starting maybe in December of this year, and then going through 2025. I think as it de-inverts, I think you'll see a lot more issue and start up in transitional loans. And there'll be floating rate transitional loans that you'll see securitized in CRE CLOs. So I think we'll see, maybe in the second half of this year, or the beginning of next year, a pickup in CRE CLOs. Matt, a client at the Dechert party said to me that right now, it's easy to get a great deal done, hard to get a good deal done, and impossible to get anything else done. So that kind of tracks with like, what the anecdotes that are floating around are. Yeah, that's why everybody's flocking towards SASB. So, all right, before we go into our next topic, I have a special treat for you guys. And Stewart, you're gonna love this as head of finance and and merchandising for the podcast, we have our first ad read. This is the start of something great. So we're going to take a brief break here to talk about the cred. The private credit industry is always on the move, and it can be difficult keeping pace as you navigate its most complex challenges and opportunities. That's why Decker created THE CRED, our new platform dedicated solely to providing legal and business insights on the private credit landscape. From the latest news in depth analysis from the top minds in the space THE CRED has private credit covered, to learn more and to sign up for the credit newsletter visit dechert.com. I hope everyone's stuck around after that. We're excited about the credit and we hope you are too. Okay, Stewart, can you talk to us about interest rate expectations? Yeah, absolutely. This kind of goes hand in hand with the mood, right? The acceptance of reality? That's gonna be my phrase for the day. By the way. Or the year. We've had a sustained period of higher interest rates. For about a year and a half or so maybe longer, we finally accepted them. They're high but from a historical perspective they're not, right? We've seen higher hopefully we don't go higher. You know, as we sit here right now, prior to what the Fed just recently announced, everyone that I talked to at the conference thought we'd see at least one cut this year. It just so happens that the Fed, when holding the rate steady today, signaled that there's going to be one cut this year. I'll open it up to the table here. And with, you know, the four meetings left, when do you think they cut the rate? I predict it's going to be in December after the election? Yeah, I'm in December, too. I don't think there's any way the Fed moves before the election, I don't think they'd want to look like they're trying to influence the election. So I think they're gonna come out in December. If they come out in December, we'll see. I'm with Matt on that one. I don't think we're gonna see any downward movement until after we know what's going to happen for the next four years, at least in political office. Conflict drives engagement. So I'm gonna be counter to everyone else and say, I think they might do it in September. They don't want to risk seeming too political and there's a risk of really acting too late. You know, as long as the numbers keep supporting it, they said it was modest improvement on inflation during the meeting on Wednesday, but I am hopeful, and maybe I've kind of had that irrational exuberance infect me over time. So we'll see. And if I'm wrong, you guys can all razz me on it the next time we do this Roulette. Got it. Yeah, well, the good thing about predictions is you don't have to be right. I would say, you know, going forward, at least the sense I got when talking to people and listening to the panels is that, no matter when they start cutting, we expect the process to be slow, it's not gonna be fast moving, maybe some people will think that the outcome of the election may impact how fast or slow these rates get cut, but I think they'll be disciplined and I expect them to be slow, though, the number I heard about as a prediction for 2025, as what we're gonna see in 2025, is probably market is thinking somewhere in the basis of over the course of the year 75 basis point reduction in rates. So, Stewart, you talked about there being a slow reaction to this, maybe reaction isn't the right word. But are you meaning like, do you think interest rates coming down will happen slowly? I'm not qualified to predict what the interest rates are going to do. There's no Stewart McQueen yield curve out there or interest rate curve. But I think that, you know, we'll see slow cuts, I think, you know, quarter, you know, 25 basis points at a time and drawn out over ... Yeah, I think as long as the economy continues to perform well, and the economy has been performing well, and there's no indications that it's going to stop. Yeah, I think it would make sense for the Fed to move slowly, once per quarter, and, you know, just cut 25 basis points per time. It's only if the economy hits some real trouble that that's when they start cutting real fast. So. But what I'm curious, and the reason why I asked that question is, you know, as on the loan origination side, I'm wondering what the lag will be between a cut, and then an increase in activity, in terms of new product going into the marketplace from loan originations. If it will be right away, or if we think it's going to be a slower build-up, or if it will just continue to be status quo. Is it me, but don't the big players start to act when they know it's about to happen? And so it probably means that those term sheets are going to start flying just before and that we're really going to be off to the races even maybe before it actually happens. Make sense to me, as long as the economy's doing well, and they're cutting because inflation is coming down not because you know, the economy is in trouble. Right. Okay, let's move on to our next topic. Kate, I think we're with you and Trevor Noah's keynote address. So Trevor Noah was this year's keynote speaker and I really Yeah, I mean, I'll key in on what you talked about, losing want to applaud the CREFC Planning Committee, I thought that he was a fabulous get to come in and talk to us not only about his craft, his outlook on the world and political systems, and in what he's done with his career, but I think what I really appreciated the most about Trevor Noah taking the stage was whether he did tons of homework or not, he appeared in sync with what we do in our industry. He took his views on productivity, life, dealing with strife, and found ways to relate it to our commercial real estate industry. I'll give you an example of that. Great catchphrases, like adaptability is more important than proficiency. Right? I think one of the subtexts that we've been talking about on this podcast today is the adaptability that we see in the use of our commercial real estate spaces. He also left a great kind of notation, I think, in the minds of everybody who was listening to him at the keynote about not looking at losing as losing, meaning that it's mutually exclusive with winning, losing is just part of living or there being a down as part of having and failure being part of life and you shouldn't shy away from an up. And just once you accept that it's there it's not the absence of something. It's just the cyclical engagement of something. So I thought that he was really gracious up there as it. It kind of reminds me of Wayne Gretzky's quote, that was a guest speaker, I want to give a special shout out as well to Frank Yin from KKR, as the moderator who clearly enjoyed himself to have this really nice tete a tete with Trevor Noah, you know, he was the inspiration for our Getting Real with the Hosts question for this podcast in terms of explaining what you do to whether it's your parents or your children. And I definitely going to take away some of the things that he said and just try to be more mindful of it on a going forward basis. One in particular that I feel like I'm struggling with right now is no rest is fertile soil that gives growth to new ideas. So I'm curious to my fellow hosts, was there anything that Trevor said that resonated with you or that you're going to remember? quoted by Michael Jordan, and then later quoted by Michael Scott from "The Office," "you miss 100% of the shots you don't take." That's a good one. Stewart. The story that I liked is he told this airline turbulence story, and it was hard to figure out where he was going with it at first. But, you know, he said, he's actually thankful for turbulence on airlines sometimes. And obviously, it was a joke. But, you know, when you encounter turbulence, and your life flashes before your eyes, you start to think about what it is that you've been doing, that you've been doing too much of, and what it is that you've been doing too little of, you know, kind of resetting your focus on the important things in life. So I thought that was a great takeaway. That really stuck in my mind. I have one last thing I want to throw out there about him, because I think this is what we try to do, not just in our practice group here at Dechert, but I feel like we tried to do this as a firm. He said that comedians love other comedians and that they work really hard to get work for other comedians that they know. And that's what we are so capable of doing and do, in fact, do every single day in our industry, right? We refer deals to each other, we refer new business to each other. You know, that whole concept of rising tide lift all boats. So that's another one that really stuck with me that I try to put into practice with my colleagues here at Dechert and also across the industry is taking care of other people. Okay, last one, I don't need to roll for this one. Matt, you're going to talk about some of the closed door sessions on CMBS 4.0. And CRE CLO? Yes, so this was interesting. At this CREFC, unlike other CREFC's before, there were, on the calendar, a couple of closed-door meetings. So, I don't know of anybody that went to these closed door meetings. So this is all a little bit of speculation on my part here for what these were about. But there was one for CMBS 4.0. And there was one for CRE CLO ongoing reporting. So I guess taking them in order, you know, CMBS 4.0, I don't actually know what's going to be in this or how this is going to be different from CMBS 3.0. But the thing that jumps out at me, at least, that's been going around lately, and has been kind of a trend in some of these SASB deals that we've been seeing is incorporating provisions for hold back accounts. I think there was a big case recently, or a big SASB securitization, where there was a very large hold back held back for potential litigation expenses at the end of the deal. And it kind of brought this issue to a head and now everybody in the industry is aware of it and is thinking about it. And so they're building in provisions into PSAs to actually put some guardrails around how these holdbacks will be treated. That also increased transparency about these holdbacks by requiring servicers to report on larger hold backs. And it can in some cases also allow the money to be invested, which I think in this other instance where there was a very large hold back that money had to sit there uninvested and didn't make any money for the certificate holders. So that's my speculation on what could be in this CMBS 4.0. But I guess we'll have to wait and see whatever CREFC comes out with, because I'm sure we'll be hearing about it over the next six months to a year. The other closed-door meeting was about CRE CLO ongoing reporting. And what I think that one will be about would be standardizing the quarterly business plan updates that each of the issuers or collateral managers produces quarterly to give investors updates on the business plans. You know, right now, each issuer or collateral manager is using basically a proprietary form that they came up with themselves, and none of them look like anyone else's. So it would make sense to standardize that. And I would think it wouldn't be too heavy of a lift if CREFC just stepped in and said, "This is what the standardized form should look like." And I think I was also hearing that there may be more columns added to the standard CREFC Annex A for CRE CLOs as well. So we'll have to see where that goes. Um, that's a project that we had helped CREFC out with a bit last year. And I guess, you know, now we're kind of tweaking that and improving it and making sure that all of the information that investors want is on that Annex A. Yeah, I heard that. They're also exploring monthly data reporting that would help a lot of the investors understand exactly what's going on on these assets, particularly around modifications. So they're going to add some fields to that, that tape. So, would that be in the note administrator's report? Devil's in the details? I don't know. But it's, I think there's a request for more information and more granular information on a monthly basis from investors. And a better reporting package means that we could possibly help improve liquidity of these bonds and make more investors interested in them. So it's a positive development. It's funny because you say closed-door meetings and I immediately, "A conspiracy theory! What's going on? But it's like, "We're gonna we're gonna standardize our reporting package so you can sell more bonds." Wonderful. Stewart, don't you have the inside track on this with your CREFC Committee involvement to know what's really going on behind those closed-door meetings and who gets the invitations? I'm under a strict confidentiality arrangement and been sworn to secrecy. No, actually, I'm I do not have inside information on what transpired. I was too busy helping the team acquire Trevor Noah for keynote. Well, well done on that. I don't know if this is Stewart finally developing a poker face or if this is, if this is the this is the real deal. So before we close things out, we've got one more brief ad that we're going to play. This is from co chair of the firm Mark Thierfelder Felder on his program at the Milken Institute. So we hope you give this a lesson. Hi, I'm Mark Theirfelder, Co-Chair of Dechert and former head of our corporate practice. As the private equity market continues to face significant headwinds, many general partners are grappling with how they can continue to generate returns, deliver value across their portfolios, and navigate uncertainty in the years ahead. If you find yourself dealing with these same issues, head over to dechert.com and listen to "The Promise and Pitfalls of Private Equity," a panel I recently moderated at Milken Institute's 2024 Global Conference featuring industry experts from Blackstone, KKR Hellman and Friedman and others. Despite the gloomy outlook, opportunities abound for those with dry powder to deploy. Learn more at the Milken Institute's website, or at Dechert.com So, hope you enjoyed hearing about THE CRED and the Milken Institute program. You can find links to both of those in the show notes for this episode. And that brings us to our 4 Real High Fives. I want to start by thanking CREFC and the CREFC Planning Committee, and a shameless plug to our own Steve McQueen for putting on such a great conference and landing someone as amazing as Trevor Noah to speak to us. Thank you, Jon, I enjoyed working with CREFC and my fellow co-chairs for this conference. And I'll continue as a co-chair for the January conference as well. So I'm looking forward to that as well. It just surprised me how much effort and thought goes into not only who the keynote speakers are going to be but you know, as far as the topics and how they're organized and who's going to be good on the panels and you know, who do we really want. Not necessarily people, like whether Jon Gaynor will be good or not, but like what type of perspectives that we want to try to get on these panels. And it was very eye opening to me to see that level of thought process going into planning the entire committee. And I was only involved in part of it. Shout out to CREFC, the entire staff and everybody who really pulls it together. That conference is not something you pull together in a day. Definitely not and I thought the panels really had a good alchemy of views and personalities, and really well done there. So Kate, I think you also have a 4 Real High Five I do you know, just it's great to recognize so many of the wonderful things that craftsy does. And one of those things is they designate two award winners at this mid-year conference. And just on behalf of the Dechert 4 Real podcast team, we just want to give a 4 Real High Five to Erin Stafford of Morningstar as the recipient of CREFC's Women of Distinction Award, as well as Brian Olasov from Carlton fields and the NYU Schack for his winning of the Founder's Award from CREFC. So kudos to them. That's awesome. So this was a great summary of the 2024 CREFC New York Annual Conference. Thanks to our producers for sharing their insights and banter. If you have thoughts about this episode, or you want to share how you explain your job to your parents, or kids, or spouses, please share them with us at our email inbox. We recently updated and simplified, it's just realpodcast@dechert.com Also, if you liked what you heard, give us a five-star rating on whatever platform that you found this on. This episode was hosted by Stewart McQueen, Matt Armstrong, Kate Mylod and me, Jon Gaynor. This episode was produced by Matt Armstrong. (He did double duty here. Trust me, everybody), Ella Smith and Sam Gilbert. Production Support is by Kara Ray, Mallory Gorham, Alyssa Norton, Peggy Heffner, James Wartman and Jacob Kimmel. Our editor is Andy Robins of Audio File Solutions. Thanks for listening. And we'll see you next time on the Dechert 4 Real Podcast. Producer Ella is reminding me that we almost forgot the dad joke. Is that supposed to be for me? I've really thought that I was going to evade it this time. If I must, I'm going to hit you then with a double whammy. So the first one is courtesy of my colleagues on the podcast. What do you call a frog that is illegally parked? What do you call a frog that is illegally parked? And then one from my very outdated joke book that's Towed. hanging around my house for my no-longer-young son. What do you call an army officer who crashes his car? Captain Crunch.