In the GlobalCapital US Securitization poll, Dechert was ranked number one, beating out three other law firms in a very close race, driven by its support from the issuer and bank segments of respondents.
“2019 was a very busy year for us” says Laura Swihart, a Partner in Dechert's global finance practice and a member of the firm's Policy Committee in New York. “What we have managed to do is to provide counsel on the full gamut of legal issues in the CMBS market while working with a very wide range of clients. Our work covers everything from the origination of loans, to their warehousing and pooling, and then their final securitization and the issuance of securities.”
Viewed with the hindsight of the first half of 2020, Dechert’s breadth and depth of activity in 2019 looks prescient as it allowed them to work on structures, issues and deals that have all been tested this year. “We work with our clients to engineer solutions and we love being in the early stages of ideas, helping them come up with innovations and iterations,” says Rick Jones, Partner and co-chair of Dechert’s global finance practice. “Last year we worked on a number of new structures, as well as worked to make existing structures more robust and cost effective, in particular making things better for the managers.”
Dechert’s advice led to a number of ground-breaking transactions in 2019. It was lead counsel on Freddie Mac’s US$765 million K-F73 deal, the first multifamily securitization to be indexed to SOFR. It also worked on Blackstone’s mammoth US$5.6bn warehouse CMBS, as well as the US$2.35bn single asset-single borrower CMBS for Lineage Logistics’ cold storage facilities.
Dechert’s work for Freddie Mac was emblematic of the holistic way that the firm approaches the CMBS market. It regards Freddie Mac as an “anchor client”, while at the same time Dechert knew that the LIBOR transition was going to be one of the defining issues of 2019 and 2020.
“Freddie Mac is at the cutting edge of the market and we are happy that we have been able to take a front seat in this and drive it forward,” says Swihart.
Working closely with the issuer, Dechert was able to help design the legal structure that underpinned the bonds, especially how the basis mismatch between LIBOR and SOFR was treated.
“We have taken a leadership role in the LIBOR SOFR transition work,” says Jones. “It was a big issue last year and we can see what a big issue it is going to be going forward.” Adds Swihart, “LIBOR is going away and we’re helping our client across the industry with that transition”.
Dechert undertook the first SOFR alternative deal for Starwood in the summer in 2019, followed by the Freddie Mac deal in December. It has now worked on 15 separate client assignments around the LIBOR transition. 2019 also saw Dechert work with regulators on other issues including risk retention, as well as generally maintaining dialogue between the capital markets and all the various arms of the government.
“An important part of what we do is liaising with politicians, legislators and regulators,” says Jones. “We want to do what is best for the capital markets as a whole to keep them moving forward.” This leadership role allowed it to work on the most important deals of 2019, enhance the resilience of the market as whole and prepare its clients for 2020, a year in which all market participants have been challenged.