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LOS ANGELES—What will the finance picture look like forcommercial real estate in 2015? Will interest rates rise? Will underwritingstandards tighten? What will impact the availability of capital?GlobeSt.com asked five experts from locally based firm George SmithPartners five different questions about the lending environmentnext year and got their predictions for the foreseeable future.

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GlobeSt.com: Most believe that a rise in interestrates is inevitable in 2015. Where do you anticipate interest ratesto be next year?

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Gary E. Mozer, principal and managingdirector: I do anticipate interest rates are going torise in 2015, but only slightly. Credit spreads will also widen dueto Dodd Frank. In addition, there will be some pressure on the10-year treasury as the economy recovers and the Fed eases,although this pressure will be marginal due to the world economybeing soft. As the world economy recovers in 2015, we will see realrate movement, as well as inflation. That said, outside of anyBlack Swan event, which is unforeseen at this point, 2015 shouldnot experience any significant changes in interest rates from2014.

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GlobeSt.com: Are there outside political, economicor other factors that will impact the potential availability ofcapital?

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David Rifkind, principal and managingdirector: Deflation, falling oil prices and continuedgeopolitical uncertainty are the major worries. Direct investmentin US real estate by foreign investors and indirect investments bysovereigns in funds that invest in US real estate have been largeparticipants in the domestic market. Protracted economic trouble athome, coupled with falling energy prices, may impact their abilityto invest in the US in 2015. On the other hand, the USeconomy is the bright spot globally. I expect thatthe availability of capital in the market will be ample, efficientand competitive. However, geopolitical concerns will result in morecredit-market volatility in the coming year.

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GlobeSt.com: Many believe underwriting standardswill tighten in 2015. Do you agree?

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Steve Bram, principal and managingdirector: I think underwriting standards willgenerally stay the same in 2015. In some areas, like residentialSFR lending, they are becoming more aggressive. In areas such ashotel lending, they are becoming more conservative, where lendersnow look at a trailing 24 months' income instead of a 12 months'.While we are starting to see some small CPI increases, they are notyet translating to increased rents. But a stronger economy isallowing lenders to make more aggressive assumptions about tenantrollover.

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GlobeSt.com: Will the changing bank regulations withBasel III impact banks' lending practices in2015?

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Gary M. Tenzer, principal and managingdirector: We have begun to see the effect of BaselIII on the commercial banks as several banks indicated that theyare widening their spreads between 12.5 and 25 basis points tooffset the new capital reserve requirements imposed by the newregulations. Banks that have not widened as yet have indicated thata potential widening is on the horizon.

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GlobeSt.com: What properties do you see lendersfavoring in the new year?

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Malcolm Davies, principal: In 2015, wewill see lenders financing every asset and asset class as long asthere is decent cash flow in place or a strong business plan toincrease and generate further cash flow. In terms ofdevelopments, we will continue to see financingescalate, with lenders expanding from multifamily into for-saleresidential, retail,industrial and hoteldevelopments, with financing mostly provided by banks and debtfunds. Outside of developments, retail, office andindustrial properties will all be strong candidates forCMBS, life companies and balance-sheet lenders,while multifamily will continue to be the asset ofchoice for the agencies. And finally, condos, subdivisions, housingand land development will all be strong candidates for the debtfunds, where traditional financing is still relatively weak.

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Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.