BIG PICTURE: Debt Capital Is Plentiful, But Strings Are Attached

PORTLAND, OR-The darling of national loan markets is apartments right now, according to a GlobeSt.com query of national and regional experts from around the nation. “Debt is available across the United States right now, and apartment is high on a lot of peoples’ charts,” Harvey Green, president and CEO of Marcus & Millichap, tells GlobeSt.com. “The reasons are low vacancies, rents are still moving and there’s good supply demand balance. “A number of the lenders aren’t looking at how quickly they can ramp up rents these days, they are looking at the historical stabilized rents and underwriting to those.”

“There’s more lender interest than there are borrowers,” says Peter Berk, director of capital markets for Manhattan-based Sonnenblick-Goldman. He tells Northeast bureau chief Amy Vaughn that “this has been the trend over the past six months, and. I see this continuing through at least the end of the year. Hopefully in 2002 it will return to its historic levels, or at least what it did in 1998-1999.”

As far as the cost of capital goes, Green says it depends on the market and the portfolio the lender is trying to fill, and that could be a good thing for real estate at the moment. “Given the stock market volatility, there was a lot of liquidity to the bond market–about a month ago, you couldn’t find a bond. Well, a lot of that money is beginning to flow back into real estate and not back into the equity market; because of the feeling there may be inflation, real estate is always that hedge.”