Opportunities On Horizon

TAMPA, FL - The head of CNL Financial Group, one of Florida's largest private commercial real estate services firm, said $12 trillion in capital remains on the sidelines because investors "don't know the rules of the game."

It's next to impossible to determine the value of real estate in today's market and investors are afraid "the knife will fall on them" if they buy amid so much uncertainty, said James Seneff, chairman and chief executive officer of the Orlando-based firm.

Seneff was one of three commercial real estate experts to speak Wednesday night at the University of Florida's Real Estate Market Strategies: 2009 forum at the Tampa Marriott Westshore.

Seneff; Frank Liantonio, the head of U.S. capital markets for New York-based Cushman & Wakefield; and Rudy Touzet, principal of Miami's Banyan Street Partners LLC, all agreed that there'll be unprecedented investment opportunities later this year as lenders sell distressed loans and foreclosed properties.

"There will be as great an opportunity as we'll ever see in our lifetime," said Touzet, former president of America's Capital Partners. Commercial mortgage defaults will be at a greater level than seen in the past and will rise to unprecedented levels, he added.

The housing market must hit bottom before the economy can begin to rebound, said Liantonio, who contends the federal government had to intervene in the foreclosure crisis to bring back stability. "Housing is really what created this," he said. "Until we put a floor under housing, we'll continue to have this death spiral."

Seneff, however, criticized the extent of the government intervention and said inflation will follow in the coming years. "This [recession] is not unprecedented," he said. "It has happened over and over again throughout history. We can get from there to here." Americans "must suck it up" and make it work, he said.

Liantonio pointed out that it costs more to use a Citibank card at an ATM not part of its system than it does to buy a share of the company's stock, which fell below $1 on Thursday. "We're in a repression," Liantonio said. "It has sucked the confidence out of the American people."

As far as the capital on the sidelines, the panelists said more current data points based on sales are needed for investors and lenders to determine the value of properties.

The panelists expect cap rates to continue to rise as investors look for yield in deciding to buy. Seneff contends a recovery in commercial real estate will follow about six months after the rebound of the stock market.

New development won't occur for some time, except for user-driven projects. "Everything we're seeing is below replacement value," Touzet said. But, investors will return to commercial real estate, Seneff said, adding: "A whole generation has been destroyed by the stock market."

"Clearly, people will move back into hard assets," Liantonio said.