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“Either the Street kinda comes back and supplies leverage, or people have to get their returns without leverage. And right now we’re at a point where people have to get their returns without leverage. So that’s why there aren’t a lot of deals happening,” he said, speaking at the Reuters Global Real Estate Summit.
The heydey of commercial mortgage markets was greased by easy money from Wall Street banks, which routinely made short-term loans to investors who wanted to invest the proceeds in longer-term assets, such as commercial mortgage-backed securities. The onset of the U.S. credit crunch last summer has pinched banks’ balance sheets, forcing them to rein in the credit they provided to these investors.
(Photo credit: Reuters)