New York City-based Integra Realty Resources' Fort Worth managing director Ben Loughry and Jeff Williams, vice president of Lend Lease's CMBS Group, concur that Archon Financial has taken a unique step with the move. "It's a safer haven than what the volatile stock market is doing and it's a higher return than what the bond market is paying," Loughry explains to GlobeSt.com.

Archon Financial, a Goldman Sachs company, is pushing a first-mortgage financing program for commercial loans ranging from $2 million to $75 million for up to 80% LTV and a fixed rate quoted as a spread above the five-year US Treasury. Spreads will range from 150 to 225 basis points.

Archon Financial's Ben Glatzer says the pipeline is filling up with borrowers as the sales force talks up the newest product. He's predicting Archon Financial, as a result, will walk away with a banner year when the 2002 books close. The lender is kicking in a bonus for loans that close in 60 days or less: a 30-day rate locked with no rate lock fee. A similar loan product has been available for residential borrowers, but not commercial, according to Loughry.

Glatzer says demand drove the product to market. That undoubtedly is true, but the financial watchers believe the demand came from well-heeled investors needing some refuge for their money at a perhaps smaller return than they'd like but at least at a guaranteed one.

Lend Lease's Williams says he doesn't foresee that kind of program trickling over to CMBS-backed loans "unless they can get fairly wide spreads to compensate. I can't imagine this being offered on a large scale."

Loughry, on the other hand, says he's not surprised that Archon Financial has taken the initiative. In fact, he says don't be surprised if other lenders follow suit as investors look for some return while they wait out the recovery. "It's a flight to a bricks-and-mortar economy," he says.

The state of the stock market and accounting scandals have been a windfall for real estate, Loughry points out. "You can go out and see the building, see the tenants, kick the structure" and know there's some return coming back at the end of the day, Loughry says. The only risk he can see in the Archon Financial program is if LTV should fall below 80%. And that, he says, isn't likely.