Chicago, IL, May 1, 2012 – The Real Estate Capital Institute finds April closed as a somewhat quite month on the real estate capital front. Nearly all benchmark indices flattened out due to predictable news from Wall Street. In other words, no real"surprises."
The most significant capital market highlights include:
According to the Labor Department statistics, unemployment stands at about
8% with significant job recovery prospects stalling. Furthermore, gross
domestic product, a key indicator of the nation's health, rose just over two
percent - weaker than expected. In conclusion, the Fed is hardly motivated
to change monetary policy and change record-low rates. Recent Fed policy
decisions are seen as "nonevents" by most investors.
Agency lending volume for multifamily continues at a brisk pace. In order
to control the overflow of business, spreads are starting to widen by least
ten basis points. As for other lenders (e.g., life companies and conduits),
extremely low mortgage yields provide little incentive to pump more money
into this investment sector. Rising stock market yields shift more funds
into equities vs. mortgages and other fixed-income investments. Thus for
now, mortgage rates are as low as can be in the foreseeable future.
The most exciting news on the capital front relates to banks. These
institutions are now actively selling and moving loans off their balance
sheets as profits have improved. Expect more seller financing as part of
non-performing loan sales, although few banks are liquidating at distress
pricing.
According to RECI's research director, Jeanne Peck (top right photo), "If you're not in the capital markets today and taking advantage of market liquidity, you're losing out to record-low deals." She adds, "Although leverage amounts are more conservative, equity yields are attractive - the whole capital stack is
very borrower/seller friendly."
According to the Labor Department statistics, unemployment stands at about
8% with significant job recovery prospects stalling. Furthermore, gross
domestic product, a key indicator of the nation's health, rose just over two
percent - weaker than expected. In conclusion, the Fed is hardly motivated
to change monetary policy and change record-low rates. Recent Fed policy
decisions are seen as "nonevents" by most investors.
Agency lending volume for multifamily continues at a brisk pace. In order
to control the overflow of business, spreads are starting to widen by least
ten basis points. As for other lenders (e.g., life companies and conduits),
extremely low mortgage yields provide little incentive to pump more money
into this investment sector. Rising stock market yields shift more funds
into equities vs. mortgages and other fixed-income investments. Thus for
now, mortgage rates are as low as can be in the foreseeable future.
The most exciting news on the capital front relates to banks. These
institutions are now actively selling and moving loans off their balance
sheets as profits have improved. Expect more seller financing as part of
non-performing loan sales, although few banks are liquidating at distress
pricing.
According to RECI's research director, Jeanne Peck (top right photo), "If you're not in the capital markets today and taking advantage of market liquidity, you're losing out to record-low deals." She adds, "Although leverage amounts are more conservative, equity yields are attractive - the whole capital stack is
very borrower/seller friendly."
The Real Estate Capital Institute(r) is a volunteer-based research
organization that tracks realty rates data for debt and equity yields. The
Institute posts daily and historical benchmark rates including treasuries,
bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at
7RE-CAPITAL (773-227-4825) for hourly rate updates.
Contact:
The Real Estate Capital Institute(r)
3517 West Arthington Street
Chicago, Illinois USA 60624
Contact: Jeanne Peck, Executive Director
www.reci.com
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