NEWPORT BEACH, CA—In this exclusive interview, Sabal Financial Group LP's Pat Jackson tells GlobeSt.com that for un-stabilized, value-add and transitional assets, lending decisions always come down to the real estate, the sponsor and if the sponsor can deliver on the business plan. To hear more on the founder and CEO's thoughts about the CMBS marketplace, the current state of capital markets and how is has affected competition and finance terms, see the interview below.

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

Pat Jackson: Sabal has always been an investor and lender in underserved market niches. We continue to see real opportunities across the country serving those niche markets. The real challenge we are facing is the industry heating up ,which has led to less disciplined investors becoming more active. Real estate fundamentals ultimately need to be the driver of real estate investment decisions as they are critical to a robust recovery. If they go out the window, we start introducing unnecessary risk into the recovery.

GlobeSt.com: With so much capital chasing deals today, how has it affected competition and finance terms?

Jackson: In certain areas, we believe that some of the fundamentals are off and that it has led to cap rates being pushed way down. Risk is increased when there is too much money going after deals. Fortunately for us, this is not necessarily happening in the markets we are pursuing. For example, a lot of focus remains on the multifamily sector. In certain regions, we believe lending in this sector has gotten so hot that it calls into question the fundamentals.

GlobeSt.com: What are the property, market and borrower dynamics that are most appealing to today's commercial lenders?

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

GlobeSt.com: While the CMBS marketplace has rebounded some, do you feel the growth will continue? And do you think we might be working again toward some of the same major issues we faced in the last downturn?

Jackson: Yes, I do believe the growth in CMBS will continue. With this growth there is risk, however it all comes down to how realistic the underwriting is and the assumptions being made about the real estate. We have seen a few deals being completed on assets with poor fundamentals and these may introduce future problems.

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

Jackson: The real estate recovery will parallel the overall economy. Job creation is a big driver behind the recovery. Also, a good economy with limited supply—not a lot of speculative building—should lead to real estate values improving and default rates decreasing for new issuances. We like the supply and demand variables in many markets.