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NEW YORK CITY-The tragic events of Sept. 11, 2001 had obvious effects on the real estate industry–most dramatically the loss of the World Trade Center and the dislocation of businesses from Lower Manhattan. What may not be so obvious was the effect the day’s attacks on real estate finance.

Speaking at the New York Commercial Real Estate Women Network’s panel discussion on real estate finance in today’s capital markets, Kim Diamond of Standard and Poors, noted that since Sept. 11 the industry has seen the demise of single-asset securitization and that larger loans were now being executed in diversified pool transactions.

As far as large loan transactions are concerned, said Cecilia Tarrant of Morgan Stanley, the need for terrorism insurance after the attacks became prohibitive to large projects, which then moved toward fusion transactions–or deals pairing larger loans with several smaller ones.

But this trend now adds a layer of complexity to an already complex process, contended Brenda Mixson of Island Capital Group. Her firm was recently involved in a deal with five large loans split among several trusts. The big question now becomes where does the control lie, she explained. “In some investments we have no control so we’ve required that we get the same information that those in control get,” Mixson said. And knowledge, she added, is valuable.

These are just some trends which have emerged in the capital markets arena over the last two years. Another trend, according to Margaret Blakey of GMAC Commercial Mortgage, is that now there are more choices out there for investors as more capital enters the real estate industry. As capital markets provided additional capital to real estate it is much more possible for investors to pick where in the investment structure they want to be, she said, adding it is “possible to pick your spot” for the return an investor is looking for. With more places to go there has been more efficiency in the market, Blakey explained, yet real estate fundamentals are not any better than they were a few years ago.

And while there are more choices, multiple players in a capital structure can lead to pitfalls, added Julie Han of TIAA-CREF. But in all, according to Blakey, the system of checks and balances in the capital markets work.

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