Magazine article Mortgage Banking

Public Capital Changing Markets

Magazine article Mortgage Banking

Public Capital Changing Markets

Article excerpt

THE NEW VARIABLE THAT COMMERCIAL MORTGAGE BANKERS ARE WRESTLING WITH today is a rather unusual one for them. International capital flows are the mercurial new force that must be reckoned with--along with the usual (and more predictable) risks of overbuilding, delinquencies and the like. This is a sign of the coming of age of the commercial real estate capital markets.

But along with the welcome liquidity that capital market access brings and the deepening of the investor base comes the whipsaw effect from here-again/gone-again capital. The randomness of its flight can be fatal, as some commercial mortgage players saw firsthand in 1998.

But there is so much strength in the economy and the property markets today that it's hard to feel much concern over this somewhat profound change in commercial real estate. Yet it is a change that's here to stay, as two of our authors in this special issue point out--Stephen Roulac says the study of capital market flows will be vital to real estate underwriting from here on out, and Jun Han says public capital will be a fixture in real estate's future. …

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