Monday, September 24, 2012

CRE Show: Outlook is Increasingly Positive for Availability of Capital

ATLANTA, GA (Sept. 24, 2012) – With continuing low interest rates and increasingly available CMBS financing, the capital markets are more accessible than they have been since 2007.

 On the latest episode of “America’s Commercial Real Estate Show,” a panel of experts shared insights about the availability of capital in the future and gave an insightful look at the myriad of forces driving this dynamic capital market.

 Here’s a bit of good news: capitalization (cap) rate compression is helping put some shovels in the ground again.

Today’s cap rates are driving a significant uptick in development in the multi-family sector as it makes more economic sense for companies to develop rather than to buy, explained Steven Marks (top right photo), managing director at Fitch Ratings.

 Many lenders are still focused on value-add projects, but some construction loans are flowing.

 “The market has given us construction loan opportunities in multi-family, anchored retail or single-tenant retail, some medical office buildings and maybe some build-to-suit industrial,” said Christopher Sweitzer (top left photo), senior vice president and commercial real estate manager at BB&T.

Another hot topic for the capital markets is the Quantitative Easing Round 3 (QE3), which is expected to cause a further decline in all-in interest rates and reduce the cost of capital for borrowers. This third round of quantitative easing was announced by the Federal Reserve Bank in mid-September.

 The Fed pledged to keep the federal funds rate at zero to .25 percent through mid-2015 and to buy an additional $40 billion of agency mortgage-backed securities per month.

For the capital markets, this means Fannie Mae and Freddie Mac are going to be viable sources of financing for multi-family developments for the near future, said Tom Walsh (middle right photo), senior vice president at Grandbridge Real Estate Capital LLC.

Meanwhile, these low interest rates will encourage institutional investors to allocate more money toward commercial real estate, explained Michael Hartman (lower left photo), director of capital markets at the Reznick Group.

 In addition, some banks are taking baby steps toward easing underwriting standards on commercial real estate loans after many years of very stringent guidelines.

 “I think these loans on commercial real estate today are probably going to be some of the safest loans that we’ve seen in a long time,” said show host Michael Bull (lower right photo) founder of Bull Realty Inc.

 Of course, there are still some clouds looming on the horizon. These risks in the current market are different because they are macro-level issues, explained Marks of Fitch Ratings.

“In the past, we were more concerned about property-level fundamentals or access to capital,” Marks said. “Going forward our concern is more macro: What happens with the economy? What happens with the European effort?”

 The entire episode on capital markets is available for download at

 The next “America’s Commercial Real Estate Show” will be available Sept. 27 and will focus on retail tenant strategies.


Stephen Ursery
Wilbert Public Relations
Office: (404) 965-5026
Cell: (404) 405-2354

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