NAVIGATING THE CAPITAL STACK

Trends are at play that affect senior debt providers, including commercial banks, life insurance companies and conduits, as well as mezzanine lenders.

It would be nice if every deal was all cash. But the majority of commercial real estate transactions require debt.

That’s made for an interesting few years as the credit crisis is still affecting lender behavior. So where do things stand as 2012 gets underway? Life insurance companies are gunning for a big year, aided in large part because they have few problems on their loan books. Conduit lenders are pulling themselves off the mat, but the sector remains a shell of its former self. Commercial banks, too, want to increase their allocations, but are wary of taking on too much risk. And mezzanine debt, a rarity in recent years, will come back as well. In the following pages, we provide outlooks for each of those sectors for the year to come.

CONTENTS

The Fruits of Caution

Life insurance firms have healthy balance sheets and want to gain market share.

Storm Front Coming

Five-year loans initiated in 2007 pose a challenge to the CMBS sector.

Bridging the Gap

Mezzanine lenders are poised for a rebound after a quiet couple of years.

Wary of Risk

Commercial banks aim to increase origination volumes in 2012.