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| Jeanne Peck |
Chicago, IL - To date, real
estate investors enjoy low
rates thanks to a global
crisis merry-go-round with China, Ukraine, Russia, Greece and now Iran
creating cycles of market panic and driving investors
back to the safe haven of
US treasuries. And money never sleeps as
interest rates are trending upward
this year, although at a calmer pace.
The Real Estate Capital
Institute's(r) director, Jeanne Peck,
predicts "Fed
rate hike discussions will
spook owners into action, both for sale and
financing. Look for 'Busy Money' as the theme for this
fall, when investors
return from summer
vacations to buckle down on their capital needs."
Benchmark yields: Good news for lenders sources,
bad news for borrowers.
The Fed has not raised
long-term rates for nearly a decade, but the low-rate
party may be about to
end. In the past month, the 5-year and
10-year
Treasurys fluctuated about
a quarter-point, landing towards the lower end of
the range of about 1.5%
and 2.2%, respectively. Current rates
are in line
with the end of 2014,
still reasonably low in comparison to the past few
years.
funding targets as worried
borrower flock to fixed-rate debt in anticipation
of a Fed rate hike. Since permanent lenders are processing
pent-up demand,
spreads are likely to
rise; many funding sources choosing to provide less
leverage rather than raise
spreads to remain competitive. Higher
quality
loans garner the most
attention with LifeCos and conduits, while more risky
deals are left to
public/private debt funds which are more prevalent. Banks
rely on more on recourse,
but will offer highly competitive spreads for
floating-rate and
short-term debt.
outcry, as multiple
players jump into the structured finance funding
spectrum. Many of today's bridge players need to
supplement their mezz,
preferred equity and joint
venture programs with a wider variety of options
to catch deals earlier in
the funding cycle. With barely any
profits in
conventional debt business
based upon interest rates of 3.5% to .5%, debt
funds entertain more
entrepreneurial prospects including partially-leased
and limited construction
projects. Structures typically priced at
combined
rates of 5% to 7% over a
five year or less holding period. Higher
risk
pricing approaches
double-digit returns, often hovering below equity yields.
For a complete copy of the company’s news release,
please contact:
Jeanne Peck, Executive
Director
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