ORLANDO - Real estate markets are booming, but commercial mortgage bankers at a convention here said they are scrambling to find business.

Rising interest rates spell a contracting market for commercial mortgage bankers, just as they do for residential lenders, according to lenders at the Mortgage Bankers Association's commercial real estate convention this week.

Indeed, for commercial lenders the predicament is compounded by a historical legacy: Commercial mortgages usually have balloon payments due after 10 years. But a decade ago the real estate market was at its trough and lending dried up. That means fewer loans are rolling over, and fewer opportunities to refinance.

Here's how some conference attendees said they are coping:

Roll out the floaters. At least three big lenders - Bank of America, John Hancock, and Prudential Mortgage Capital - and one big investor, Freddie Mac, announced floating-rate loan programs at the convention. These loans are indexed to the London interbank offered rate and have terms of three to five years.

"Everybody seems to be doing it. It's driven by demand from the borrower," said David Twardock, president of Prudential Mortgage Capital, the real estate arm of Prudential Insurance Co.

The rate on such loans can go up, but they carry much less punitive prepayment penalties, and if market conditions change they can be refinanced more easily than the standard commercial mortgage, which has a fixed rate pegged to Treasuries and a balloon payment after 10 years.

Borrowers are opting for the adjustable rate for two reasons, Mr. Twardock said. They believe rates are unlikely to keep rising and want the flexibility to refinance if rates are lower in a few years. And some are not sure what they will do with their properties in a few years, and want to keep their options open.

The lenders making these floating-rate loans hope that the borrowers will eventually call on them to refinance into permanent fixed-rate mortgages. Barry Nectow, senior vice president at John Hancock, said his firm sees its floating-rate offering as "a feeder to our long-term fixed program."

Let borrowers lock in rates. Bridger Commercial Funding, a Mill Valley, Calif., conduit lender, recently started giving its borrowers the option to lock in an interest rate at application - before a commitment has been made. Why? If rates go up before an application is approved, a borrower would have to take out a smaller loan to meet the same debt-service coverage requirements.

"The thing that kills most deals is that when Treasury rates change, you can't get to the dollars," said Bob Schonefeld, a principal at Bridger. The firm is paying to protect its customers from this risk - it has to put on an interest-rate hedge at the time of application, so it has to incur the cost of hedging without actually holding the asset being hedged.

Dangle incentives to producers. Prudential said it is expanding its third-party mortgage origination program into 14 markets around the country, including San Francisco, Dallas, Houston, and North Carolina. Brokers in these areas that can deliver $25 million or more of conduit loans will be rewarded with such benefits as referrals of loans in Prudential's portfolio that are coming due and joint marketing and cost-sharing arrangements.

Meanwhile, Wells Fargo & Co. advertised its "first-quarter loan special": It will waive legal and processing fees for any loans submitted by its correspondents.

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