This year is shaping up to be a "Back to the Future" year incommercial real estate finance, with life companies the preferredcapital source for much of the market, and a nice balance of banklenders, CMBS shops and bridge capital providers rounding out thecommercial market. Of course, Freddie, Fannie and FHA lendingcontinues apace in the multifamily realm, yet even with thatproduct, more traditional capital providers are filling more marketneeds, as new construction necessitates bank loans, and borrowersrecognize a need to be diversified in their capital sources onexisting product.

Although one could look back to the 1980s and see similaritieswith the dominance of life company lending in the market, thepresent time is much more consistent with the late 1990s, when thereal estate markets were returning to health after a damagingrecession, and the capital markets were active but cautious.Lenders were determined to not repeat the mistakes of the past, andthe new entrant to the market, CMBS, was well underwritten withamortizing loans and cautious documentation requiring such thingsas funded reserves.

At present, we have experienced a strong return of thetraditional life lending programs in all property types, and asteady but growing pipeline of CMBS loans for properties that needmore leverage than life companies allow, or those which may not fitthe traditional lender box just right. Our bank loan business isactive and varied, with non-recourse bank lending picking up steamas a shorter-term low-rate alternative in the permanent loanmarket. This is a big difference from two years ago, in which dealflow was heavily dominated by apartments, with Fannie and Freddielending at that.