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Securitization gaining as financing method.

As risk-based capital requirements have forced banks, thrifts, and insurance companies to curtail commercial real estate lending, more and more property owners are turning to Wall Street these days for financing. The method of choice is known as securitization, a process whereby investment banks make loans to commercial borrowers, issue fixed income (or floating rate) securities backed by the loans and sell the securities to investors.

"Securitization can be effective and competitive solution to the capital shortage in many cases," said Ronald M. Stone, co-chairman of New York-based Guardian Capital Group, a real estate investment banking firm active in real estate debt securitization. "The fast-growing market for securitized commercial real estate financing has gone from near zero in 1990 to more than $6 billion in the first half of 1993."

Guardian has created a niche for itself by emerging as a force in opening the capital markets to multi-family and other commercial real estate owners whose financing needs do not meet the transaction size of major Wall Street firms. According to Stone, Guardian specializes in single- and multiple-borrower securitizations of $25 million and up, versus transaction minimums of $100 million or more at the large investment banking firms.
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Title Annotation:real estate debt securitization
Publication:Real Estate Weekly
Date:Sep 22, 1993
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