WHAT'S YOUR OUTLOOK ON THE FUTURE OF THE CMBS MARKET INFLORIDA?

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Last week's national GlobeSt.com Quick Poll asked readersto place their bets on the CMBS market. A majority of respondents,69%, say CMBS is sleeping, while 12% believe it is dying and 19%think it's already dead. S. Kelly Anzinger, assistant VP with RBCCapital Advisors in Orlando, shares her thoughts on the CMBSmarket:

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"The CMBS market should gradually return as a viable financingvehicle in 2009, although volume will most likely remainconsiderably less than 2005 and 2006 levels. This is in part due tothe economic slowdown and industry shift to alternative capitalsources, such as life companies, pension funds and banks. Pricingwill likely remain above the 200 bps range, as risk premiums haveadjusted upward across all sectors from levels seen during thefrenzy prior to last summer.

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"The good news is that investors, motivated by the Fed's move toaccept CMBS and other asset-backed securities as collateral fordirect loans, and by the improving credit quality of CMBScollateral (due to more stringent underwriting), are beginning tobuy CMBS again. As a result, investor spreads on AAA to BBB piecesare tightening, which means the breakpoint for conduit lenders isdecreasing, and this will translate into lower spreads/interestrates quoted to CMBS borrowers.

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"However, more equity and asset stability will be required toqualify for a CMBS loan in future. Florida's tourism-driven economymeans our state is heavily weighted with hotel properties, whichare considered more risky than other commercial property types. Theabsence of "old school" CMBS—cheap, long-term, fixed rate debt at75% to 80% leverage—may hit this sector hardest, especiallylimited-service and budget hotels, which are not popular amongalternative capital sources."

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