Despite Bright Spots in Capital Markets, BoyarMiller Forum Panelists Forecast Turbulent Times May Last Through 2010

`Tsunami of Real Estate Debt Maturities and Defaults is Now upon Us`
HOUSTON--(Business Wire)--
After being hammered by the recession, U.S. capital markets are showing signs of
life, but some will get sicker before returning to full health was the general
consensus by panelists today at BoyarMiller`s annual "Current State of the
Capital Markets" forum. Real estate in particular faces significant challenges
over the next five years.

In discussing current and future trends in real estate finance, CBRE/Melody Vice
Chairman Tom Fish told Houston business leader attendees that "the tsunami of
real estate debt maturities and defaults is now upon us" and will be here for
the next several years."

"The vast amount of mortgage debt that matures between 2009 and 2013 cannot be
refinanced in the current prevailing market. There will likely be a refinancing
shortfall both in the number of deals that get refinanced and the amount that
each deal qualifies for in new proceeds," Fish said. "This means the
de-leveraging of U.S. real estate during the next five years will create an
unprecedented challenge for lenders and borrowers and therefore an opportunity
for astute investors with fresh capital."

Of the $3.4 trillion of debt outstanding, banks account for half of all
outstanding real estate debt, commercial mortgage-backed securities account for
20 percent, and life companies and government agencies represent just under 10
percent each. Loan maturities from commercial mortgage-backed securities, life
companies and banks are expected to total $1.4 trillion over the next five years
- the same amount that matured over the last 15 years when capital was abundant,
Fish said.

"The period of 2010-2013 will be one of unprecedented stress and disruption in
the U.S. real estate capital markets - a time when lenders could be forced to
take massive losses on their commercial real estate portfolios," according to
Fish.

Fish predicted that, while there will be billions in foreclosures and
restructures, more capital will flow in 2010 as pressure mounts to get money off
the sidelines and generate yield. 2009 will be the low water mark for
transaction volume even though property performance might continue to decline
through 2010.

In a review of commercial banking, Amegy Bank Chief Executive Officer Paul B.
Murphy Jr. said funding continues to be available for good businesses although
demand has significantly declined.

"Loans are at higher spreads with more conservative structuring and credit
quality remaining the focus," Murphy said. "The bottom line is, spreads have
widened but the all-in cost of borrowing is still very attractive."

Bank failures mean a steady supply of troubled real estate loans, as well as
downward pressure on economic growth, on rates, and on small banks whose share
of the U.S. deposit market plunged to 2 percent last year from 13 percent in
1992, Murphy said.

"The opportunities going forward are in buying distressed assets, maintaining a
fortress balance sheet, keeping liquidity strong and simply remaining afloat,"
according to Murphy. "Examine the structure of your accounts - FDIC coverage,
rates, safety and soundness of your bank - and strengthen the security of your
finances because 2010 may continue to be turbulent."

Thomas M. Hargrove, managing director and co-founder of GulfStar Group,
indicated that continuing issues with raising significant amounts of senior debt
have resulted in a decrease in the merger and acquisition activity.

"For sellers to attain their price expectations, they are often required to
provide seller financing," Hargrove said, "and earn-out payments are sometimes
necessary."

In addition, for the first time, the energy industry, which traditionally has
kept Houston insulated from economic downturn, is having its own issues,
according to Hargrove. Refining and petrochemical margins and activity are down
considerably with product pricing, as well as natural gas pricing, having
declined considerably.

"The drilling rig count domestically has decreased substantially causing
companies servicing the exploration and production industry to operate at much
lower levels of production," said Hargrove.

There are some bright spots in private equity and mergers and acquisitions,
according to Hargrove, including:

* Large amounts of uninvested private capital exist in the market - private
equity firms have raised a significant amount of capital and the number of
transactions have decreased dramatically
* The stock market has recovered from its March 2009 lows, which is usually a
precursor that predicts increased activity levels in mergers and acquisitions
* The increasing tax environment may prompt additional owners to sell their
companies in the future

In looking at equities and public markets, Andrew D. Kanaly, chairman and CEO of
Kanaly Trust, said the credit crisis is affecting prime borrowers. "Prime
products such as non-agency, jumbo and agency have had the highest rates of
deterioration since January 2008. The biggest increase in deterioration has come
in the last six months," Kanaly said.

Other key points made by Kanaly are:

* Consumer spending has a long way to fall. Household balance sheet repair (more
savings, paying down debt) is likely to drive economic fundamentals over the
next several years. In a $14 trillion economy, reversion to the mean has a huge
impact.
* The unprecedented increase in excess bank reserves could ultimately lead to
high inflation.

"Portfolio diversification is key to strong future investment returns," Kanaly
said.

About BoyarMiller

BoyarMiller is a Houston-based law firm comprised of two practice groups:
business and litigation. The business group serves multinational companies,
middle-market businesses and entrepreneurs in need of collaborative and
strategic representation. The Litigation group represents organizations of all
sizes, from entrepreneurs to Fortune 500 companies, seeking to resolve complex
business issues and employment disputes. Our unique strategy and vision, as well
as our dedication to closely identifying and partnering with our clients,
distinguish BoyarMiller as a practice with purpose. Please visit
www.boyarmiller.com for more information.

BoyarMiller
Executive Director
Doug Parker, 832-615-4284 or 713-705-8682 (cell)

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