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| John Oharenko |
Project quality and actual cashflow performance
drive pricing. Leverage levels remain conservative by hovering at
65% or less for most commercial properties (except multifamily).
Key capital market highlights are outlined
as follows based on mortgage pricing ranges:
2.5%-to-3%
range: Agencies continue to strongly dominate the multifamily
pricing arena, regularly offering below 3% rates. Lower leverage
levels approach the mid-2%-range. Life companies also fund loans at
these rates for prime assets based on terms of 10 years or longer.
3%-to-3.5%
range: Commercial banks and credit unions offer shorter-term fixed
and floating rate loans in the lower-to-mid-three-percent range. Lenders'
higher cost-of-funds and more structured deals typify this pricing sector.
3.5%-to-4%
range: Smaller loan sizes (below $5 million) and more challenging
property types (e.g., retail) drive higher pricing for permanent
debt. Mortgage conduits, debt funds, and life companies are active
in this pricing segment.
4%-or-higher
range: Rates above 4% serve as entrepreneurial funding programs
based upon higher leverage and more cash flow uncertainty; Mostly funded by
private capital sources.
The
Real Estate Capital Institute's Executive Director, Mr. John Oharenko,
suggests, "Rates continue hovering at, or near, historical lows with no
increases on the horizon. Borrowers focus on maintaining cash flow
during the pandemic, as real estate investing stays in a defensive posture."
The
Real Estate Capital Institute® 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.
Contact:
John
Oharenko
The Real Estate Capital Institute®
Chicago, Illinois USA 60622
Contact: John Oharenko, Executive Director
director@reci.com / www.reci.com