Commercial property valuations exceeding the initial purchase price could lead to greater loan defaults in European CMBS transactions, reported analysts at Standard & Poor's, who warned that lenders should be wary of valuations that do not reflect recent purchase prices.

"As commercial mortgage lenders find themselves in an increasingly competitive market, the pressure to finance borrowers might expose them to some of the riskier practices from the borrowing side," said one analyst at S&P. "There is sufficient concern that these practices could affect some existing [CMBS] deals and future transactions as well."

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