CREFC Miami 2023: Lisa Pendergast Targets Debt Fund Growth

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While market participants grapple with dislocation in early 2023, the Commercial Real Estate Finance Council (CREFC) is looking to expand its reach within the growing private debt fund space.

Lisa Pendergast, executive director of CREFC, is aiming to establish a debt fund index to benchmark market performance across the industry. The CREFC initiative, which has been in the works since before the COVID-19 pandemic in concert with the National Council of Real Estate Investment Fiduciaries, is designed to create an infrastructure for reporting information with debt funds to bring those funds more in line with commercial mortgage-backed securities (CMBS).

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“What is cool about the CMBS market, that I think is different from others, is it worked from the very beginning because it provided so much transparency,” Pendergast told Commercial Observer during the annual CREFC Miami conference. “And I think from a different perspective, having an index where you can show how this fund is competing relative to other funds and how it’s performing — that’s what drives the market because there has to be something we benchmark.” 

CREFC’s increasing outreach to debt fund professionals was also evident with its recent realignment of its programming schedule to schedule an alternative lenders and high-yield investors forum for May 3 at the New York Athletic Club

Pendergast is leading CREFC in the midst of major market dislocation as financiers grapple with uncertainty about rising interest rates and future valuations for property sectors battered by the pandemic, particularly office. She said the single-asset single-borrower CMBS market, which comprises a large chunk of office debt, will be a solid indicator for how investors view the asset class amid increasing hybrid working trends.

The CRE industry has confronted liquidity challenges of late, with banks largely stepping back their lending activity in the past few months once the Federal Reserve began to aggressively raise interest rates in the second half of 2022. Pendergast said she hopes the Fed is nearing the end of its rate hikes and that its efforts to combat inflation will avoid a serious recession, enabling CRE lending to resume at healthy levels.

“What we’d love to see is a soft landing as an industry where the Fed doesn’t put us into a recession and decides that they’ve done what they need to do to fight inflation,” said Pendergast, who prior to arriving at CREFC in 2016 headed up CMBS strategy at Jefferies and Royal Bank of Scotland. “And then I think the industry starts to move back to some semblance of normalcy with the understanding that there are some asset classes that may forever be impacted by COVID.”

Andrew Coen can be reached at acoen@commercialobserver.com