by Jan Sternin, Senior Vice President and Managing Director, Berkadia
In January 2014, the servicing heads of Berkadia and Wells Fargo met at an annual conference to catch up and discuss the current state of the commercial real estate (CRE) industry. The conversation eventually turned to something else that they had in common: their captive offshore servicing platforms in Hyderabad, India. Berkadia established its platform in 2002 and Wells Fargo expanded an existing platform to include CRE servicing support in 2006.
Mark McCool, President of Berkadia Commercial Real Estate Services, and Alan Kronovet, Executive Vice President and Head of Wells Fargo Commercial Mortgage Servicing, discussed the continued expansion of their platforms and both companies’ commitment to quality, training and employee development, agreeing that education was a fundamental component of their success. For both companies, the commitment to education yielded substantially higher annual education hours per employee compared to the industry benchmark, as established by the rating agencies. They further agreed that their employees were ambitious with an eye towards accretive knowledge and advancement.
Importantly, they also recognized the one component of training that their teams in India were largely missing: direct and personal access to current market and business trends that impact the CRE sector.
Domestic based servicing and production operations are afforded myriad opportunities to obtain information, whether it is via regional or annual conferences dedicated to industry specific subject matters or larger events bringing together representatives from across the U.S. CRE sector. Conversely, offshore operations or third party providers do not have the same access to information, current events and subject matter experts. For example, both Wells Fargo’s and Berkadia’s servicing operations in Hyderabad rely on the dissemination of industry data and market trends through town hall meetings conducted during visits from senior U.S. based managers, video conferencing and MBA training courses that are available on-line. Although valuable information is shared, these meetings do not provide the same experience of hearing and networking with industry leading subject matter experts face-to-face.
Genesis of a Symposium
The opportunity to recognize the impact India has had on CRE business operations and the ability to provide a training venue for so many professionals led to the conclusion that a conference should be conducted in India. After discussing with their respective servicing platforms, the concept of organizing a Commercial Real Estate Symposium in Hyderabad was born, which would be a forum for employees at all levels to learn about CRE trends from top industry leaders.
Jan Sternin, Senior Vice President of Berkadia and Dan Bober, Executive Vice President of Wells Fargo were tasked with establishing and leading the venue, defining the events, logistics, conference attendees and everything else that would be needed to ensure a successful execution. Wells Fargo and Berkadia did their part financially too, by agreeing to co-sponsor the Symposium.
To appeal to a broad audience, highly respected and well known speakers were needed. In order to attract that type of talent, it was necessary to create an event that would be recognized industry-wide and one that could ultimately be added to the global CRE conference calendar. Fortunately, Hyderabad has become a financial services center supporting the CRE industry amongst other sectors, which gave instant credibility to the Symposium and helped it gain the recognition and momentum needed.
An industry inclusive invitation list was developed and familiar companies that owned offshore operations or were third party service providers that supported U.S. CRE efforts accepted the invitations, including: Blackrock, Cognizant, Accenture, Silverskills, MCube, Genpact and Standard & Poors (S&P).
The programming efforts began with creating a thoughtful agenda that would cover all aspects of the current CRE landscape, such as the servicing and origination sectors, a broader U.S. economic and market overview, a detailed look at underwriting and servicing trends, career management, legislative and regulatory issues and, of course, the future of outsourcing. With a number of topics to cover and in anticipation of a large number of attendees, the decision was made to create a one day program that would be replicated on the second day in order to offer the Symposium to twice as many professionals.
Making the Concept a Reality
Event planning began in earnest in February 2014, when both Fitch Ratings and S&P committed to visiting Berkadia’s and Wells Fargo’s Hyderabad operations. They were not the first agencies to do so, but their timing gave both Berkadia and Wells Fargo an opportunity to identify and present a venue that could support what would be approximately 450 attendees per day for the Symposium. Ultimately, the new and impressive Trident Hotel in Hyderabad was chosen because it was large enough to support the attendees and could provide accommodations for the panelists and out-of-town guests.
The groundwork for the Symposium was now in place. Conversations began with potential panelists about the concept and the vision of the Symposium. The responses were immediate and incredibly positive. Industry leading servicers, rating agencies, law firms and investment banks were approached, as well as the CRE Finance Council (CREFC) and Mortgage Bankers Association (MBA). Understanding the importance of such an event, Morningstar Ratings responded, not only with a willingness to participate, but also with a desire to help sponsor the event. Prior to the Symposium, Mary Chamberlain, Senior Vice President of Operational Risk Assessments at Morningstar Ratings, who had initially visited both Wells Fargo and Berkadia in 2013 noted, “The event will provide individuals with a better understanding of the needs of investors, lenders, regulators and other industry participants. Morningstar also believes that future conferences and networking opportunities within India will facilitate communication among servicers within the country to better serve the needs of the broader U.S. CRE market.”
Additional financial support came from law firm Bryan Cave LLP, which also sent Keith Dunsmore and Katie Schwarting, both Partners at the firm, to participate in the Symposium as speakers. Sponsorship was rounded out by law firm Dilworth Paxson LLP and Co-CEO Ajay Raju, who has roots in India and is deeply committed to growing the connective tissue between U.S. and India operations.
Through the initial discussions regarding goals for the Symposium, another key focus area was identified for the conference: CRE education for Indian academic institutions. Despite boasting workforces that have achieved either an Undergraduate or Master’s Degree, both Berkadia and Wells Fargo acknowledged that their employees had not received CRE related educational training or coursework. Deans and Administrators from the top Indian universities were contacted about attending the conference and 14 universities accepted our invitation, noting the importance of learning more about CRE service providers in the Hyderabad area and gaining firsthand experience about the value of incorporating basic CRE course work into business curriculums.
As the finishing touches for the Symposium came together, the program and panelists were finalized and invitations were accepted by notable companies in the industry, including: Jefferies & Company, Inc., Prudential Asset Resources, GEMSA, Moody’s, Cassin & Cassin, the MBA and CREFC. Leading up to the Symposium, panelists and sponsor companies received an introduction to Hyderabad—one of the most mature global business process centers in the world—to get more comfortable with the event and surroundings they were about to experience and participate in.
A Traditional Beginning
The conference began with the Symposium sponsors coming together for the “lighting of the lamp.” In the Indian culture, light symbolizes knowledge. Knowledge is regarded as everlasting wealth that is capable of removing ignorance just as the light removes darkness. The flame of the lamp always burns upward, symbolizing that one should acquire knowledge to achieve higher ideals.
Interpreting the U.S. CRE Landscape
As the program got underway, attendees listened intently to Joe Beggins, CEO at GEMSA Loan Services, Hal Collett, President of the Prudential Asset Resources Unit at Prudential Mortgage Capital Company, Alan Kronovet and Mark McCool, as they discussed the state of the servicing industry. Topics included maturities, compliance and regulatory constraints, gaining efficiencies and talent retention. McCool noted, “It’s about culture, respect and appreciation,” and Kronovet added, “It’s our people who separate us from the competition.” This was followed by Steve Renna, President and CEO of CREFC who moderated a “State of CRE Lending” panel and another session by Jeff Schummer, the Head of Education for the MBA. His speech regarding educational offerings and certifications engaged the attendees who were all clearly focused on achievement and advancement.
As the days progressed, the panelists continued to share thoughts related to trends and challenges that affect the U.S. CRE industry, from cap rates to maturities, to the multifamily and retail financing landscapes, to the current CRE legislative and regulatory environment. Keith Dunsmore, Caroline Blakely, a Partner in the Real Estate Group at Cassin & Cassin and Stacy Stathopoulos, Senior Vice President, CREFC, discussed the latter topic and covered Dodd Frank, Basel III and the recently announced final Regulation AB Rule.
The centerpiece of the Symposium was the keynote address, which followed the luncheon on both days and covered U.S. economic and market trends. Lisa Pendergast, Managing Director and Co-Head of CMBS Strategy and Risk at Jefferies & Company, agreed to deliver the keynote address and focused on a comprehensive overview of current economic and market conditions, as well as thoughts on the 2015 outlook and beyond. Lisa noted “The Hyderabad conference was eye opening. The attendees were engaging, hardworking, and eager to further their knowledge and participation in our business. Their obvious sense of pride in their respective positions and their quest for more information are truly amazing.”
Throughout both days of the Symposium, attendees interacted with the panelists and asked thoughtful and sophisticated questions, illustrating their command of the subject matter specific information, as well as market trends and challenges.
Steve Renna noted, “I was impressed by the level of professionalism of the conference attendees. Their honed real estate finance capabilities were evidently displayed. They asked well-informed and incisive questions.” He added, “They had a refreshing desire not only to be experts in their job function, but also gain a broad and dimensional understanding of the marketplace.”
Both days’ programs ended with a reception, where the attendees had an opportunity to meet their industry peers as well as the panelists, a unique experience for any conference.
Looking to the Future
Over the course of the last dozen years, US CRE businesses have thoughtfully and deliberately leveraged a talented workforce in India to perform increasingly complex CRE origination, securitization, fund management and servicing processes. As this growth continues into the future, events like the Symposium provide an opportunity for informational exchange, networking as well as helping to attract new talent to further fuel growth. For US participants, these events present a unique opportunity to observe, first hand, an important, but less visible part of the infrastructure that supports the US CRE industry.
A common theme from the panelists was that the Symposium very much resembled an event held in the U.S., including the programming, venue and audience interaction. The overarching takeaways that we heard immediately following the Symposium were that the level of energy was beyond expectation and most wanted to know if there would be a second CRE Symposium. Specifically, Michael Gerdes, Managing Director at Moody’s Investors Service said, “The high level of energy from the audience made it a thrilling experience to participate in.”