"The investors who are buying a lot of the CDOs (collateralized debt obligations), investors that are buying a lot of the CMBS (commercial mortgage-backed securities), have started to push back on some of the more aggressive deal terms," he said this week at the Reuters Global Real Estate Summit in New York.
The meteoric rise of real estate prices over the past few years allowed investors to finance, in some cases, more than 90% of their acquisitions using borrowed money, such as mortgages, mezzanine debt and bridge loans.
Much of that debt was then used by investment banks and others to back securities sold to pension funds, university endowments and other institutional investors. The money raised was then recycled back to make more loans.
Such loans would fund purchases of individual properties and large real estate portfolios, such as Blackstone Group's $23 billion acquisition in February of Equity Office.
The issue of risk, and investors who assume it by purchasing the loans and securities, came under scrutiny in the winter as residential mortgage defaults spiked.
While commercial real estate has not seen the sort of rise in foreclosures the residential market has, lenders and CMBS investors have demanded either to be paid more for risk or that issuers get rid of some of the riskier loans they are selling.