How did the real estate depression and capital crunch of the early 1990s trigger the expansion of public market involvement and securitization in commercial real estate, covering both debt and equity?
The real estate depression and capital crunch of the early 1990s led to a significant decline in traditional bank lending to commercial real estate. This created an opportunity for public market investors, such as REITs and CMBS investors, to step in and provide muchneeded capital. The federal government also played a role in fostering the growth of public real estate markets by creating favorable tax policies and regulations.