Peter Cosmetatos takes up the reins today as chief executive officer of CREFC Europe, with a vision to increase its regulatory influence as well as developing on-going improvements to best practice guidelines so the market works better, but posing less of a threat to financial stability in the future.
Speaking ahead of his first day as CREFC Europe’s first-ever CEO, Cosmetatos talked to CoStar News about how he is approaching the role of building awareness of CREFC Europe’s brand, as well as its scope of influence within its existing and potential membership base within the UK and on the Continent.
“The starting point is blank canvass in many ways because I am not replacing anyone, this is a new role,” he explains.
“What everyone I talked to agrees about is that there is a real need and potential for CREFC Europe to become the undisputed meeting place for all those it represents – like CREFC already is in the US, or, for its members in the UK, the BPF that I have joined from.
“CREFC Europe has not done that yet,” admits Cosmetatos.
Commercial Real Estate Finance Council Europe was formed in July 2004, initially as the Commercial Mortgage Securities Association, before the name change in March 2010 after the trade association decided to broaden its membership from the CMBS market to encompass the wider real estate finance industry.
With more than 68 member companies in Europe, CRE Finance Council Europe seeks to promote the on-going strength, liquidity and viability of all aspects of the commercial real estate finance market.
Cosmetatos’ appointment is a significant sea-change in the work of the trade association, which will celebrate its 10th anniversary of operating in Europe next year.
Rebalancing European membership
“The way I think about CREFC Europe’s role is that it has two main customer bases around its core membership: the providers of capital and the consumers of capital. The core is principally the intermediaries who are responsible for ensuring that capital finds its way from investors to CRE businesses, but it’s vital we also have strong relationships with those two customer bases.
“Coming from the BPF, it’s the consumers of capital that I already know well. Since my move to CREFC became known, I’ve been struck by how few in that world know about the organisation, whom it represents and what it does. So, there is a lot of work to do there.”
Cosmetatos said part of his strategy for the next year or two is to ensure that CREFC Europe’s membership better reflects the fast diversifying real estate finance markets, including the growing capital contribution of insurance companies in senior debt provision, as well as that of debt funds.
“I think it probably makes most sense to develop our model in the UK first, and then to see how that needs adapting to serve the major European markets.
“We need to find ways to reflect the challenges unique to Germany, France and Spain, and we are keen to be truly European in time.”
Communication and co-ordination with the industry
Cosmetatos said he has an ambition to link-up with the different trade associations throughout the property industry as well as wider business bodies.
He will look to join the Property Industry Alliance (PIA), which is a cross-industry alliance of eight separate UK trade associations which seek to work together to tackle major property issues.
PIA’s members are the Property Committee of the Association of British Insurers (ABI), the Association of Real Estate Funds (AREF), British Council for Offices (BCO), British Council of Shopping Centres (BCSC), British Property Federation (BPF), Investment Property Forum (IPF), Royal Institution of Chartered Surveyors (RICS) and Urban Land Institute (ULI).
Cosmetatos explains: “Communication in the industry is all important. The PIA is a forum which strengthens the communication between different member associations in a co-ordinated manner which better serves the industry as a whole. I think CREFC belongs there.
“In Europe, we should be participating in the European Real Estate Forum, a loose group of two dozen European and national industry associations coordinated by EPRA and INREV to improve industry communication. EPRA and INREV are, like CREFC in the US, among the organisations we can learn from, as they combine policy work with promoting best practice and bringing the industry together, as we want to.”
Deepening regulatory influence of CREFC Europe
Cosmetatos, who left BPF last month after five years as director of finance policy, said he plans to establish a direct dialogue with regulators is an important change in the perception of CREFC Europe.
“After five years at the BPF,” he said, “speaking with government and regulators to try to ensure sound policy development is my bread and butter. CREFC Europe should have a similar direct relationship with financial regulators.
“Until now, CREFC Europe has relied overwhelmingly on the invaluable support of its members to communicate with regulators such as the European Banking Authority, the Prudential Regulation Authority and the Bank of England.
“While members’ participation is a cornerstone part of the work of CREFC Europe, having the capacity within the executive for strong, direct relationships with regulators will enhance our influence and profile as a truly representative industry body. That will allow us to help shape the regulatory framework of the future for the good of the whole industry and the wider economy.”
Shaping a more robust market
“To some extent – and in particular with the European political establishment – we have a lot of work to do to rebuild the reputation of our industry as a force for good. Rightly or wrongly, the behaviour of the real estate finance sector is widely perceived to have caused the global financial crisis of the last few years. We won’t win arguments about the shape of regulation if we aren’t doing the right things in the market.
“It’s vital that we promote better transparency, better analytics, better disclosure and better underwriting standards in the market – not only because that is good for our members and our industry, but because it is necessary as part of a wider contribution to making the financial system more resilient in the face of the property cycle.
Cosmetatos aims to have spoken with as many of CREFC Europe’s members as he can by the end of the year, and there is no better event to gauge the mood of members than at CREFC Europe’s Autumn Conference over November 13-14, hosted by Clifford Chance at its Canary Wharf offices.
After the conference, Peter Denton takes over the chairmanship of CREFC Europe succeeding Christian Janssen, who uniquely held the position for two years.
Cosmetatos concludes: “I can’t pretend I’m not coming to this role with a head full of ideas about what we can achieve and how we can achieve it. But I’m acutely aware of the need to listen to the industry and above all our existing members about what they think CREFC Europe is already doing very well, and what they want to see us do differently, or more of, in the future.
“So I am not coming into this job with a pre-prepared strategy. I want to develop and test my strategy as I go, and that means plenty of listening and learning so we can harness the enthusiasm of others alongside my own.”
Peter Cosmetatos can be reached at firstname.lastname@example.org