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NEW YORK CITY-When the capital markets crunch developed, some life insurance companies stepped up investment in commercial real estate, eager to fill their books with high quality projects and paper underwritten to more realistic credit standards. Others, including Allstate, pulled back a bit in response to the turmoil. Now, however, the company is rethinking that position.It is a change in attitude for the life insurer -– but a subtle one, Michael Moran, senior portfolio manager and head of the Real Estate Portfolio Management Group at Allstate, is quick to say. Moran is responsible for strategic planning, risk management and new product development for the company’s $20 billion portfolio of commercial mortgages, CMBS, REIT debt, B-Notes CRE CDO’s and real estate fund investments.”Not much has changed overall [in the past six months],” he tells GlobeSt.com. “Life insurance companies are still lending — but at a reduced pace. Some companies have invested at a faster pace this year than they normally would have. Others have done the opposite. We are one of those companies that remained less active – and will likely pick up the pace soon.” Overall, though, he says, Allstate’s real estate lending’s pace will not match that of the last few halcyon years.

GlobeSt.com: Are you investing in CMBS at all these days?

Moran: We have had a historically high allocation to CMBS and we are still active today.

GlobeSt.com: Are you finding bargains in the market now?

Moran: Oh yes. There are a lot of opportunities to find value. The CMBS market remains liquid, so trading opportunities vary based on market conditions.

GlobeSt.com: Can you give me an example of recent trades you have executed?

Moran: We want to get out of credit bonds that are perceived as being weak vintages and go into high-quality, vintage-2008 bonds on a net neutral basis.

GlobeSt.com: There have been some CMBS deals coming to market lately. Are you interested in these at all?

Moran: No, we are fully allocated to CMBS now — we are not looking to add to the portfolio.

GlobeSt.com: In what areas are you increasing exposure?

Moran: We have a growing appetite for real estate equity opportunity funds – specifically opportunistic and value-add, with an emphasis on international exposure.

GlobeSt.com: How much of an increase are you giving this category?

Moran: Equity funds are a small percentage of what we do at Allstate. Still, though, I would say from that base we will substantially grow our allocation in the medium term.

GlobeSt.com: What about distressed debt? Will you be increasing your allocation to that asset class?

Moran: That is not a particular focus of ours right now. There is way too much money raised for distressed debt compared to the quality of opportunities is that space. Our focus is more on diversification in support of a broad asset allocation strategy, rather than a tactical, opportunistic strategy.

GlobeSt.com: You say you will be stepping up your investment pace but it won’t match the level of the last few years. Any final thoughts on the current state of the real estate capital markets?

Moran: The debt markets remain challenged but are open at more rational leverage levels. The exuberance, of course, is long over but now it seems as though the death spiral is over as well. Ever since the Federal Reserve Bank’s bailout of Bear Stearns, the tail has been cut off. Leverage levels and risk appetite will not return to where it was at the peak of market for some time – if ever – but I think there will be good opportunities to be involved in the markets over the next six months.

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