CPN - September 2008 - (Page 19) INDUSTRY PULSE FINANCE The loan also illustrates the appeal of building or buying in primary markets that have barriers to entry and the benefit of an experienced, well-capitalized sponsor like the joint venture behind the Manhattan deal: a combination of The Carlyle Group, Extell Development Co. and RREEF Alternative Investments. In today’s climate, balance-sheet lenders like life companies and commercial banks will remain the more prevalent debt providers. Life companies generally prefer to lend for 10 years at fixed rates, and commercial banks are more likely to favor floating-rate loans at five years, according to Kohn. Those tendencies can vary considerably, depending the first two quarters of 2008, 12 months, new capital sources will a fraction of the 26 percent share help,” Melody speculated. Where those lenders provided between Jan- that help might come from is uary 2006 and the middle of 2007. unclear, but he suggested that new Although little relief is in sight financing tools could emerge from for borrowers, the abundant capital a retooled CMBS market or from a waiting on the sidelines may yet 8/12/08 by investment banks to give move 11:05:33 AM NMCOR_Closer_Sept_CPN.ai present solutions. “In the next investors confidence by holding on to the B notes in CMBS tranches. In the meantime, it looks like creativity, patience and flexibility will be borrowers’ words to live by. —Reach senior associate editor Paul Rosta at paul.rosta@nielsen.com. For more finance stories, visit www.cpnonline.com/finance. “In reality, very few people are lending. Everyone’s trying to live to fight another day.” —David Rifkind, George Smith Partners Inc. ing on the asset and the sponsor. While those lenders have their pick of borrowers, their role in the debt markets has changed. In 2007, the top 10 capital sources for CBRE Capital Markets-arranged deals included Freddie Mac, a pair of life companies and seven Wall Street firms, reported vice chairman Tom Melody. This year, the top-10 list features seven new lenders: Fannie Mae, two life companies and four commercial banks. Perhaps most telling is the debut on the list of five lenders with which CBRE Capital Markets did negligible business last year. The debt markets continue to feel the impact of the virtual vanishing of conduit financing. A recent study quantifies the changes that unfolded after the market’s peak, from January 2006 to June 2007. According to Real Capital Analytics Inc., debt assumed by buyers now accounts for half of acquisition financing (see “Changing Players” on page 18). That figure sat near zero as recently as June 2007. Wall Street provided one-third of acquisition financing nationwide at the peak of the market but only 1 percent during the first half of 2008. And national banks supplied only 8 percent of acquisition financing dur- Getting the deal done is what we live for. A singular passion for closing every deal with a timely precision that helps our clients make the most of every opportunity. Sure, we’re a little fanatical about your success. But honestly, would you want it any other way? Capital Market Solutions northmarq com northmarq.com northmarq.com Equity • Debt • Investment Sales www.cpnonline.com • September 2008 • COMMERCIAL PROPERTY NEWS 19 http://www.cpnonline.com/finance http://northmarq.com http://www.cpnonline.com
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