Chicago, IL, Sept. 3, 2013 - The seesaw battle between
inflation
fears and lagging economic growth reflected the investor
fears of August.
The last full month of summer witnessed rates steadily rise
by more than 25
basis points for 5 year maturities as investors try to
tackle uncertainty
based upon Fed Policy.
Even as interest rates moved upward during the past few
weeks, most lenders
have held mortgage spreads unchanged. Permanent mortgage rates for ten-year or
longer debt are hovering in the 4.75% to 5.25% for most property types.
Shorter-term debt is readily available at 4% or below for
the most part.
With another round of mortgage rate hikes, borrowers feel
pressured to lock into fixed-rate debt.
On the other hand, lenders are trying to carefully match optimal rates with the proper yield profile as not to
have too much long-term debt exposure, should rates continue rising. Given such capital market conditions, expect more equity/participating debt
programs to emerge
as lenders look for rate protection.
Commercial property markets recovery is choppy with major
coastal and energy-related markets enjoying stronger results. In the commercial
property markets, many businesses feel better about the
economy.
As such,
tenants are starting to sign longer-term leases, and
landlords report improving cash flow, especially in the industrial and retail
sectors. Multifamily properties and hotels continue to enjoy better
performance, but owners worry about rising expenses - especially from real
estate taxes.
The Real Estate Capital Institute's Jeanne Peck
suggests, "The remainder of
 |
| Jeanne Peck |
the year will be more challenging as investors realize that
rates have hit
bottom and are now on a rising trajectory." She concludes, "Rising rates
are not necessarily bad, if accompanied by stronger economic
growth for
better cash flow performance."
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.
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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