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| John Oharenko |
Chicago, IL – The economy continues on the recovery path, as the new administration plans to vaccinate most of the nation by this summer.
According to John Oharenko, Executive Editor of The Real Estate Capital Institute, "The economic rebound moves forward with more momentum.
”And
even with rising rates, overall debt pricing appears favorable with mortgages
funded in the lower-three-to-four-percent range."
Rising
Rates: Since the beginning of the year,
the benchmark 10-year treasury climbed about three-quarters of a
percent. Last month accounted for about a third of the increase, as
investors witness a quicker recovering economy.
"While
index rates rise, lenders attempt to maintain spreads, but capital surplus
leads to compressed profits for funding permanent fixed-rate
debt. On the other hand, expect floating rates to remain low, as the
Fed maintains lower, short-term yields for the next couple of years.
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| Steep price hikes noted in housing industry |
Spotty Recovery:
Lodging, retail, and office property types still lag. That said, limited-service, neighborhood grocery-anchored centers, and suburban offices show signs of resurgence. Industrial remains "hot," even with record amounts of new construction. And as always, credit-tenant properties across various sectors attract premium prices.
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| Hotel funding sources eye cash flows before dealing |
Proforma Underwriting: In select instances, lenders return to proforma underwriting for recovering properties (e.g., hotels) if cash flows show trending increases.
Funding sources will consider profitability thresholds witnessed before the pandemic for establishing
financial performance limits.
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
Executive Director
The Real Estate Capital Institute®
Chicago, Illinois USA 60622,
