Regardless of technological change, the basics remain the same - all communications are filtered by the five senses of seeing, hearing, touching, smelling and tasting. No small wonder that American business spends billions every day targeting the senses. And, the rules for reaching those senses are changing dramatically.

In today's overheated realty capital markets, most of the underwriting focus is on property location, physical issues and cash flow performance. And in specific instances - particularly long-term, net leased properties - these variables are sufficient enough to accurately underwrite an income-property loan.

During January, key treasury rates steadily climbed by about a quarter percent, rebounding slightly with yesterday’s Fed announcement to hold rates steady. Overall rates are similar to spring, 2006, although mortgage spreads continued narrowing. As is the case since August with short-term rates, Bank Prime and LIBOR stayed unchanged.

Borrowers feast on extremely competitive loans as lenders fund record amounts of debt in a highly competitive realty capital market. Rates, amortization schedules, prepayment provisions, good faith deposits and other traditional underwriting terms are liberally negotiated.

Only a few years ago, mortgage spreads below 100 basis points over comparable-term treasuries were reserved for the highest quality, institutional-property loans. Such pricing required long-term, credit tenant occupancy and substantially conservative leverage of 65% or less.

Permanent loans, mezzanine, secondary and other debt financing options are abundantly available for most existing properties with reasonable cash flow streams. Furthermore, terms and conditions have never been more favorable. Lenders are accepting low spreads at reduced (or no) fees, and offering other incentives including lower legal and third-party processing costs.

Historically income-producing real estate debt has been indexed to Baa Bonds. However during most of this decade, the price differentiation is dramatically moved in favor of real estate, instead of corporate bonds. Corporate Baa Bonds are currently trading in the range of 6.5%; commercial mortgage bonds are trading in the 5.5% to 6% range.

Over a year ago, income-property mortgage rates climbed, both short and long term. Prime and LIBOR-based debt rose by more than one-and-one-half percent. Long-term rates saw less dramatic spikes to the tune of about three-quarters of a percent.

It goes without saying that the supply of money is abundant for all property types. Apartment, retail, office and industrial properties are the traditional asset classes favored by most lenders. However over the past two years, the lodging industry has made strong performance gains and recovered from the horrible aftermath of 9/11.

Mortgage rates have been increasing throughout the year. Yet by historic standards, rates are a bargain.