This year is shaping up to be a “Back to the Future” year in commercial real estate finance, with life companies the preferred capital source for much of the market, and a nice balance of bank lenders, CMBS shops and bridge capital providers rounding out the commercial market. Of course, Freddie, Fannie and FHA lending continues apace in the multifamily realm, yet even with that product, more traditional capital providers are filling more market needs, as new construction necessitates bank loans, and borrowers recognize a need to be diversified in their capital sources on existing product.

Although one could look back to the 1980s and see similarities with the dominance of life company lending in the market, the present time is much more consistent with the late 1990s, when the real estate markets were returning to health after a damaging recession, and the capital markets were active but cautious. Lenders were determined to not repeat the mistakes of the past, and the new entrant to the market, CMBS, was well underwritten with amortizing loans and cautious documentation requiring such things as funded reserves.

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