Author: Randybacon

CMBS Lenders Jack Up Loan Spreads; Others Follow Suit

by Randybaconin Commercial Mortgage LendingLeave a Comment on CMBS Lenders Jack Up Loan Spreads; Others Follow Suit

Commercial Real Estate Direct Staff Report

Lenders in recent weeks have responded to the volatility rocking the CMBS market by increasing the premiums, or spreads, they use to determine their loan rates.

Their loan spreads are now 235-250 basis points more than swaps, up from 175-200 bps two months ago. But because Treasury rates, from which swap rates are derived, have declined since July, the overall rates that borrowers are seeing haven’t increased much.

While CMBS lenders have been most impacted – spreads for benchmark CMBS are now some 25 bps wider than they were two months ago, and for lower-rated classes, spreads are 75 bps wider – other lenders are following suit.

CMBS lenders are now quoting rates of 4.5 percent to 4.75 percent. While those are still historically low levels, they’re up from the 4.15-4.3 percent rates that were commonly seen earlier in the year.

Other lenders, including life insurance companies, banks and the housing-finance

agencies, haven’t widened their spreads as much as CMBS lenders – they’ve widened them by at least 20 bps – so they’re evidently not taking advantage of volatile market conditions to pick up market share. That’s in part because they might not be able to. Still, they’re hotly pursuing low-leverage loans against favored property types in strong locations.

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CMBS Pricing Is Uncertain Amid “Skittish” Market

by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment on CMBS Pricing Is Uncertain Amid “Skittish” Market

Anyone watching the CMBS investment market in recent weeks has seen some warning signs. Spreads have widened, while ratings agencies such as Moody’s have expressed concerns about “deteriorating credit quality.”

“There is some definite nervousness in the market, and it is not clear yet which way the market will move,” says Manus Clancy, senior managing director at research firm Trepp. CMBS spreads started to widen in June, including one big move that occurred in late June/early July and a second big move in early August as it relates to new issuance.

“We believe that has more to do with the general skittishness of the global economy, the slowing growth in China and the potential unintended consequences of a rate hike from the Fed than it has to do with the credit quality of CMBS per se,” says Clancy.

Read entire article here in National Real Estate Investor

To find out more about commercial mortgage finance contact Liberty Realty Capital Group.

Baby Boomers, Less Homeownership Supports Apartment Markets

by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment on Baby Boomers, Less Homeownership Supports Apartment Markets

The apartment business is depending on strong demographics and stronger demand to keep absorbing the hundreds of thousands of apartments still planned to open this year.

“In 2014, apartment rents grew 4.6 percent despite a fairly good amount of supply,” says K.C. Sanjay, senior economist for data firm Axiometrics. “The reason for this is the job growth, right above 200,000 new jobs a month, and rental household formation.”

That’s sounds like a solid foundation for strong demand for apartments. But a close look at the demographics shows a few odds twists and turns in the data. The growing number of U.S. households turns out to be largely due to an aging population, not young Millennials with new jobs, according to a recent report by the Terner Center for Housing Innovation at the University of California at Berkeley. Also, an unusually low rate of homeownership is driving people to rental housing—but that can’t last forever, reports Axiometrics.

Read entire article here in National Real Estate Investor

To learn more about multi family financing contact Liberty Realty Capital Group

Marijuana Producers Gobble Up Warehouse Space in Denver Area

by Randybaconin Real EstateLeave a Comment on Marijuana Producers Gobble Up Warehouse Space in Denver Area
Marijuana plants grow underneath water-cooled lights in the Pink House Blooms grow house in Denver, Colo.

Steve Badgley has been hunting for a larger warehouse in the Denver area for more than a year. But his construction-supply business keeps getting squeezed out by a new entrant into the real-estate market: the marijuana industry.

Since voters in Colorado and Washington legalized recreational use of the drug in 2012, growers and distributors have gobbled up most of the available warehouse space in the Denver area, a major logistics hub for companies moving goods between the Midwest and the West Coast.

Read entire article here in Wall Street Journal.

To discuss commercial financing opportunities contact Liberty Realty Capital Group.

Donald Trump Wants to Raise His Own Taxes, and Here’s How He Could Do It

by Randybaconin Real EstateLeave a Comment on Donald Trump Wants to Raise His Own Taxes, and Here’s How He Could Do It

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Billionaire Donald Trump, who built his fortune in real estate, told Bloomberg Politics this week that he wants to raise his own taxes. One way to do it is a bipartisan proposal that would blow up one of the real estate industry’s favorite tax breaks.

The break, known as the like-kind exchange or “1031” for the tax code section it comes from, lets real estate owners sell one piece of property and buy a new one soon afterward without paying any capital gains taxes on the profits from the sale. The result is an ever-increasing pile of deferred capital gains, taxed only whenever there is a final sale or, better yet, never taxed as income at all upon death.

“It was originally meant to really cover a narrow set of transactions,” said Lily Batchelder, a former aide to Senate Finance Committee Democrats and to President Barack Obama. “It’s grown into this huge loophole, especially for wealthy real estate investors.”

Read the entire article here in Bloomberg Politics

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