• Commercial real estate values are down 30% to 40% from the 2008 peak.
• Mortgages prior to 2008 frequently reached over 80% of appraised values.
• Mezzanine or other secondary financing was readily available to fill the gap between 80% and 90% LTV
• Appraisals often used projected rents to calculate net operating value.
• Cap rate compression meant investors accepted lower returns/higher prices for property.
• High prices, inflated rental income and ultra high leverage left little room for error

The risk component on 2008 property deals far exceeded the reward side. Risk/reward was skewed against investors.  The coming economic pain was inevitable.

• Lender currently lend 60% to 65% of appraised value (Government Fannie/Freddie apartment loans are higher)
• Appraisers will adjust actual rents to current market rents absent compelling evidence to the contrary.
• The 60% to 70% mezzanine piece prices at  as much as 15%.
• Investors demand high acquisition CAP rates with resultant low purchase prices
• Purchases require significant capital.
• Supply of cash capable buyers is constrained.
• Existing financing structures cannot be refinanced without large capital infusions.
• Lending institutions are required by capital reserves requirements to issue capital call on property owners.
• Many property owners have no place to obtain the cash required to meet capital calls.
• Rents have dropped substantially
• Existing tenants are requesting, and getting, rent adjustments
• Many owners of capital are "on strike" pending clarity of potential confiscatory government actions.

The risk component on high quality purchases favors the buyer but fewer buyers can, or will, buy.

Contrary trends:

• Lenders see that forcing a foreclosure results in large loan losses
• Property owners are reluctant to sell into such an undervalued market
• The expected flood of bargain basement priced properties has not materialized.
• High quality, institutional grade, properties are quietly in demand provided the price is right..
• Smart, resourceful, players are in the market capitalizing on buying opportunities and market inefficiencies.
• Real estate securities markets have emerged as an important source of capital while also allowing investors access to opportunities previously reserved for institutional players.