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MBA CREF panel 2 The panelists said competition is tough, with both foreign and domestic investors and debt funds trying to get into the game.

SAN DIEGO—With more major diversified financial institutions appearing to be taking ownership stakes in debt funds, mortgage-banking firms and technology platforms, the waters are growing murkier for those that have been in this space for some time, panelists at MBA CREF/Multifamily told attendees here Tuesday. The session “Capital Source Convergence: Are the Lines Among Financing Sources Becoming Blurred?” explored the divergent business models that are shaping the formation and ownership structures of active market participants and how intermediaries and lenders are viewing the future and accessing less-traditional financing sources and deliver models to match borrowers with lenders.

Daniel Baker, EVP of KeyBank Real Estate Capital, said with more entrants into the debt space, the market has become more competitive, and Jeff Friedman, co-founder of Mesa West Capital LLC—which is in negotiations to be acquired by Morgan Stanley—agreed, saying “I wish everyone would leave my block—I was there first!” He said his firm had a “lemonade stand” that was profitable, and now there are 40 “lemonade stands,” so his company’s visibility is horrible. Why have all these new funds emerged? “The search for yield by institutional investors, and the fundamentals of this space have been great. Current income and downside protection is what debt funds can offer, and the flood of capital is driving down costs.”

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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.

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