"Really this has been a debt calamity, debt liquidity freeze much more so than an equity one," said Adam Raboy, managing director of Credit Suisse. "I think most of us will still tell you that there is a lot of cash on the sidelines willing to invest in equity if they are getting 20-plus percent return on it."

Raboy was the moderator of a panel discussion staged by the ULI's Westchester/Fairfield chapter held at the Rye Town Hilton on Tuesday. Stewart Campbell, VP, mortgage banker for Capmark Financial Group's New York City office, said that the "real hole in the market" is the lack of permanent financing--seven years or more--for any type of real estate deal with the exception of multi-family. In terms of bridge financing, there is some financing options available, however, he notes, not at the leverage levels of the past. He adds that on the multifamily side of the business in the New York region, his firm has encountered competition from area community banks looking to finance projects. Raboy and the other five panelists at the ULI conference agree that commercial finance activity will suffer until someone finds an answer to the lack of available senior debt.

William Lashbrook III, SVP of PNC Bank, said simply: "There is not enough capital in the commercial banking system to absorb all of the demand for real estate debt that exists in the US today. One of the things that is going to have to happen is if you have a deal that is coming up near term my suggestion is if you can get your money be happy with it, do not argue about the price, do not argue about the structure. If the market stabilizes in five years you can undo it and recoup. But the commercial banks cannot do it alone."

Lashbrook said that while the write-downs have taken place in the securities side of the lending business, commercial banks have yet to write down bad real estate debt in their respective portfolios. He said that in this environment commercial banks would cease most if not all of any speculative type lending. Lashbrook and other panelists predict there will definitely be some bank failures due to the issues that now exist in the commercial lending arena.

Jeffrey Dunne, vice chairman, New York Tri-State Region for CB Richard Ellis, said that the types of deals that will take place in this volatile market include: transactions involving assumable existing debt, smaller deals under $30 million that will still attract bank financing and all-cash deals. He adds that the real estate and pension funds are still in play, but are more conservative.

He expects foreign capital to also pick up some of the slack, such as Irish, German, Spanish, Japanese and Middle East funds, however most foreign-based buyers are looking to invest in major CBDs rather than in suburban locales.

Travis Pauley, general counsel for Darien, CT-based Old Hill Partners, says private equity funds, like Oak Hill, will be one avenue for financing. Another will be foreign capital coming into the US in the form of REITs or foreign investors acquiring established undercapitalized US REITs whose stock value is languishing. He also said that newly established private equity funds will be major players.

Also appearing on the ULI panel was Jeffrey Dishner, senior managing director asset management and development for Starwood Capital Group.