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

director@reci.com

www.reci.com

The   Real Estate Capital Institute(r)

3517 West Arthington Street

Chicago, Illinois USA 60624