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NEW YORK CITY-It’s a cautious market, as we all know, and capital, while not totally dried up, is certainly in short supply. But GlobeSt.com, in its latest Quick Survey, has drilled down a bit below the apprehensions to trace where the money is coming from–and exactly where it is going. Respondents are taking their hats off–not for Alan Greenspan–but for the private investors who are pumping money–albeit with a wary eye–into real estate deals.

In fact, some 79% of our participants report that interest-rate cuts levied by Greenspan and his gang have had no serious effect in sales transactions, while only 21% say they can see a cause-and-effect.

That’s no surprise, according to one participant, who wrote: “Mr. Greenspan’s ability to stimulate the markets has greatly declined why he still commands the ability to send the markets into decline.”

The problem, counters another writer, is tied more into where the rates are being felt: “The cuts have not drained into the mid- to long-term debt markets,” says the participant. “Thus, they are not impacting the sales arena. Lenders are slower, more critical and even skeptical of transactions, making it difficult to pursue and close on tough, creative deals.” Not only is little help coming from the Fed Reserve, but lender consolidation–such as the recent alliance struck between L.J. Melody and GE Capital Real Estate–is limiting the financing options open to most commercial borrowers, say 61% of our participants.

So where’s the money coming from? Private investors are digging deep to cough up the cash for purchases and redevelopment projects, say 39% of our respondents. We switch from equity to debt for the Number Two player–commercial banks (32%). And for Number Three–CMBS pools garnered 12% of the vote, along with insurance companies.

There is likely to be little change in the order of the players in 2002, our participants tell us, with private equity investors pulling 38% of the vote and commercial banks garnering 24%. Insurance companies, at 15%, will pull slightly ahead of CMBS pools, which will be a factor according to 14% of our respondents.

Where’s all this money going, you might ask. We did, and 65% of our respondents told us it’s going into apartments. That’s far ahead of the second most popular capital target–industrial properties–which pulled in 11% of the vote. Office came in with 10%, and retail (7%); seniors housing (4%); and hotels (3%) pulled up the rear.

This order of things comes as no surprise to one of our participants. There’s “no shortage of capital for opportunistic deals and for stabilized apartments and for industrial,” he writes.

And another tells us that this is precisely how the market will play out next year. “The key operative for 2002 is risk avoidance,” he says. “The focus is to remain on rental housing as consumers’ concerns increase over the slowing economy and deferral of major capital decisions.”

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