Tuesday, April 2, 2013

Euro Zone in Spotlight with Cypruss in Center Stage


Jeanne Peck
Chicago, IL, April 2, 2013 -- Once again, the Euro Zone is in the spotlight with Cyprus in center stage. This time around, the stock market hit record highs and the bond markets reacted calmly.   Investors are becoming more accustomed to such news. Therefore, overall treasury rates remain somewhat flat with mortgage markets continuously enjoying record low rates.

All in all, five-year fixed-rate debt is priced in the 2.5% to 3.5% range with ten-year debt priced approximately 1% more. The only other news on the permanent loan front is the FHA/HUD. This agency's rates are now more in line with conventional mortgage markets.  The program still remains attractive though, due to the longer-term and non-recourse, new-construction funding program options.


In addition to senior debt discussions, mezzanine and preferred equity
funding sources continue to tighten pricing.  Loans up to 75% leverage are
priced in the single digit range; for aggressive, higher leverage debt of up
to 90% of the capital stack, lower to mid-teens is now the new benchmark.
The sources of funds find themselves aggressively competing with cheaper
equity capital.  Everyone is scrambling to find attractive realty investment
opportunities in various parts of the capital stack.

CMBS Lenders continue to fill their higher goals for 2013 by tightening spreads and actively quoting smaller loans (although few will be interested in loan sizes less than $5 million).  Priced over swap rates rather than
treasuries, their quotes have been competitive with more traditional sources for certain properties.

Lastly, a select group of life companies are returning to the market with competitive participating loan programs.  These funding sources offer construction/perm product for to-be-built multifamily projects with up to 90% leverage on cost; accruing coupon rates of 4.5% and more.  

In return, they receive a participation of cash flow and reversionary profits (usually just below 50%).

According to Jeanne Peck of the Real Estate Capital Institute, "lenders are
opening their wallets wider than ever before. Nearly everyone is in the fray
for originating loans, and it's difficult to discern which capital player is
a best match for what type of deal."

For a complete copy of the company’s news release, please contact:
  
Jeanne Peck,
Executive Director

The   Real Estate Capital Institute(r)
3517 West Arthington Street
Chicago, Illinois USA 60624

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