Annual bings and bongs of real estate finance.

Fantini & Gorga, one of New England's leading commercial mortgage banking firms specializing in arranging real estate loans of all types, has announced its annual biggest winners (the bings) and biggest losers (the bongs) in the real estate capital markets in 1999.

The Bings

Anyone who closed a permanent loan early in the year: Since the first quarter, long-term interest rates have increased over 100 basis points. Given the expectations on the likely direction of interest rates, a near term repeat of the rates of early 1999 is as likely to reappear as Santa Claus is to disappear.

Pension Fund Investors: Pension fund managers and their advisors have plenty of reason to be cheerful this holiday season. Diminished competition from Real Estate Investment Trusts (REITs) has allowed this investor group the ability to buy on more advantageous terms. In addition, overall real estate holdings have enjoyed steady appreciation.

Insurance Companies: These lenders definitely returned to the commanding position they have often enjoyed as the lender of choice. The threat from conduit lenders has largely been repelled, allowing most insurance company lenders to cherrypick the most attractive loan opportunities. An abundance of loan origination volume has freed up most of these lenders to start their holiday shopping early.

Land Owners: Entitled land has become increasingly valuable, as overall feasibility for new developments has continually improved. Some land has gone up as much 10 times in value since the blizzard of problems that blew in the early Nineties.

Existing Property Owners: With the constraints in the development sector of the capital markets, the supply side has been held down, benefiting many private owners who have been standing on the sidelines simply watching property values increase. Santa has been good to this group, even though they have not been forced to work very hard. this year.

The Bongs

Conduit Lenders: This group began the year with heightened expectations after recovery from the bond market debacle in late 1998, which had put their future on thin ice. Loan originations were expected to overflow Santa's sleigh, but plenty of room for more loans remains at year-end. Overall, the conduit product has been given a frosty reception from many borrowers, who much prefer an insurance company deal if their property is of acceptable quality.

REITs: There will be little Christmas shopping done by the holders of REIT stocks. This investment sector has been given the big chill from the capital markets. Both debt and equity has been difficult to source, and the outlook is hardly rosy for the year ahead.

Construction Loan Borrowers: Continued bank consolidation during 1999 left the moderate sized non-institutional borrower with fewer and fewer lenders with which to do business. Consequently, many such borrowers end up with coal in their stockings rather than a gift of new building blacks.

Public Real Estate Service Companies: The acquisition binges of the sales and brokerage companies have left stockholders of the acquiring entities as red-faced as Santa Claus, while stock prices have continually drifted downward. There is little reason to forecast any improvement soon.