A lot of capital chasing commercial real estate deals has led to a relaxation in underwriting standards, according to panelists at a session on underwriting quality at the MBA's commercial real estate finance convention in San Diego."It's an efficient market, and it's working right now," said Susan Branscome, a principal with Q10 Triad Capital Advisors, adding that she is seeing a reduced emphasis on equity in deals. Conduits have become more aggressive in the last couple of years, and the life companies have followed suit to keep up, Ms. Branscome said. Michael Bellissimo, chief underwriter at Arbor Commercial Mortgage, predicted that there may be "some hiccups" when it comes time to refinance the loans. Michael Gerdes, a senior credit officer/vice president at Moody's Investors Service, observed that the rating agency is seeing more non-stabilized assets that used to be the domain of equity investors. Collateralized debt obligations and commercial mortgage-backed securities avenues are efficient financing vehicles, and that efficiency has allowed originators to search out new property types, he said. All this "fishing" has led to a deterioration in fundamentals, he says.

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