Speakers Laud Terror Insurance Law

Recently passed federal terrorism insurance legislation will be beneficial to the commercial real estate industry, according to panelists at a mezzanine loan forum organized by the Information Management Network.Drew Fung, a principal with Lend Lease Real Estate Investors, said the legislation is "a big plus" and that many deals that were "hamstrung" due to a lack of terrorism insurance will now start moving forward. "High-profile assets are in a much better place now," he said. Mr. Fung believes, however, that insurance costs will still be significant until new entrants get into the market. David Mahoney, a Merrill Lynch director, predicted that "one thing we will see in 2003 is large, single-asset deals that were put off this year." Ed Shugrue III, chief financial officer at Capital Trust, noted that the mezzanine lending market is getting larger. About $1.3 trillion in commercial mortgage debt is outstanding, and when most mortgage loans come due, there is "tremendous demand" for mezzanine loans, Mr. Shugrue said. Moreover, the many loans that were made in the period 1995-2000 will be coming due in the next two to three years, he said. Mr. Mahoney estimated that about $20 billion worth of mezzanine lending opportunities will be generated next year.