Alex Finkelstein is co-editor of Debt & Equity Journal, from which this article is excerpted.

Chicago—Endless streams of cash are flooding commercial real estate and reshaping global property markets. "This is a tidal wave," notes Michael Goldman, senior vice president of acquisitions and finance at Chicago-based Golub & Co. "Describing the flow as strong would be a relief. Too much money has been raised for both debt and equity and it is not going to be returned any time soon."

Clifford N. Mendelson, senior managing director of the structured finance group at Transwestern Commercial Services in Bethesda, MD, says, "From a debt perspective, the flow is huge." He notes the recent $36 billion deal between Equity Office Properties Trust and the Blackstone Group "shows the equity flow is huge, as well." Mendelson says the issue to consider is whether spreads may widen because of an excess demand for money in the first quarter of 2007 with a debt requirement of more than $30 billion from Blackstone alone.

David R. Brown, president and CEO of ORIX Real Estate Capital Inc. in Chicago, says cash flow is robust "for debt and equity and everything in between." He continues, "On the equity side, the only buyers getting priced out are the ones who previously were using high LTV loans with low short-term floaters when Libor was lower than 2%." On the debt side, "the advent of CDOs is making it even more competitive. This is expected to grow dramatically during the next couple of years," along with increasing conduit volume.