Will these structures stand the test of time?

Investor demand for US commercial property-backed debt is rapidly increasing, with strong bids coming from Europe and Asia. An exciting new range of structured finance and derivatives products is on offer, but issuers and investors might be biting off more than they can chew. Kathryn Tully reports.

Credit Suisse develops new property derivatives

INVESTORS MUST SEARCH hard to find a decent return these days, hence the attractiveness of property. In particular, US commercial real estate is hot, and it is not just Donald Trump who will tell you that. According to Colliers International’s 2006 Real Estate Forecast, the sector will experience another blockbuster year in 2006, with continued growth in office, industrial and retail real estate. Even if the US economy grinds to a standstill, the commercial real estate consultancy predicts that there will be enough momentum to carry the market through to mid-year at least.

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