FLORHAM PARK, NJ-2011 was a busy year in the world of realestate capital markets. Despite less than stellar real estatefundamentals, there was and is no shortage of capital forwell-conceived investments in the US and specifically New Jersey.New construction, dormant for years, has seen a significantincrease across the State with multifamily leading the charge.

This was fueled by extremely low (+/-5%) cap rates, rent growthand a certain exit via Freddie and Fannie. We have seeninstitutional equity chase these opportunities like no other andconstruction lenders have competed strongly for the debt. Limitedto no recourse is commonplace for the best of class projects.Construction for commercial projects are limited to those withsignificant pre-leasing much like 800 Scudders Mill Road inPlainsboro, pre-leased to Novo Nordisk for their North AmericanHeadquarters. That said, projects like Centra, a105,000-square-foot spec office building in Metropark and MiddlesexLogistics Center, a 570,000-square-foot spec industrial project inEdison, were all done with no pre-leasing. These and other "spec"projects are best of class and lenders are anxious to compete forsuch projects.

This past year we saw the re-emergence of CMBS, however, it wasnot without drama. By early summer, European volatility and the USdowngrade resulted in AAA rated bond pricing to go from 105 inJanuary to 205 in August. BBB's went from 250 to 800 in the sameperiod. Market experts believed that CMBS would reach $50-60B in2011 (the high was $230 billion in 2007, 2010 was $12 billion),however, through November they are at about $30 billion.)

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