NEWPORT BEACH, CA—In this exclusive interview, SabalFinancial Group LP's Pat Jackson tellsGlobeSt.com that for un-stabilized, value-add and transitionalassets, lending decisions always come down to the real estate, thesponsor and if the sponsor can deliver on the business plan. Tohear more on the founder and CEO's thoughts about the CMBSmarketplace, the current state of capital markets and how is hasaffected competition and finance terms, see the interviewbelow.

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GlobeSt.com: As a national firm active in multipleavenues of commercial real estate, distressed assets and finance,what are your thoughts on today's capital markets in terms ofopportunities and challenges?

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Pat Jackson: Sabal has always been aninvestor and lender in underserved market niches. We continue tosee real opportunities across the country serving those nichemarkets. The real challenge we are facing is the industry heatingup ,which has led to less disciplined investors becoming moreactive. Real estate fundamentals ultimately need to be the driverof real estate investment decisions as they are critical to arobust recovery. If they go out the window, we start introducingunnecessary risk into the recovery.

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GlobeSt.com: With so much capital chasing dealstoday, how has it affected competitionand finance terms?

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Jackson: In certain areas, we believethat some of the fundamentals are off and that it has led to caprates being pushed way down. Risk is increased when there is toomuch money going after deals. Fortunately for us, this is notnecessarily happening in the markets we are pursuing. For example,a lot of focus remains on the multifamily sector. In certainregions, we believe lending in this sector has gotten so hot thatit calls into question the fundamentals.

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GlobeSt.com: What are the property, market andborrower dynamics that are most appealing to today's commerciallenders?

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Jackson: It always comes down to thestrength of the real estate and, more importantly, how the realestate will perform over time. We like the fact there has not beena lot of new construction in most sectors, which should bode wellfor a strengthening marketplace. For un-stabilized, value-add andtransitional assets, lending decisions always come down to the realestate, the sponsor and if we believe the sponsor can deliver onthe business plan.

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GlobeSt.com: While the CMBS marketplace hasrebounded some, do you feel the growth will continue? And do youthink we might be working again toward some of the same majorissues we faced in the last downturn?

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Jackson: Yes, I do believe the growthin CMBS will continue. With this growth there is risk, however itall comes down to how realistic the underwriting is and theassumptions being made about the real estate. We have seen a fewdeals being completed on assets with poor fundamentals and thesemay introduce future problems.

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GlobeSt.com: Looking forward, are there anypredictions you have about our current cycle and the health of ourindustry as a whole?

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Jackson: The real estate recovery willparallel the overall economy. Job creation is a big driver behindthe recovery. Also, a good economy with limited supply—not a lot ofspeculative building—should lead to real estate values improvingand default rates decreasing for new issuances. We like the supplyand demand variables in many markets.

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.