Debt Matters | Interest Rate Updates, Projections & Lending News

From the desk of Jason Hochman

Volatility – Over the last month we’ve seen interest rates fall and rise with significant day-to-day movement. The 10 year treasury was about 2.35% in mid-November, fell as low as 2.06% and has risen in the last few days to about 2.20% today. Both domestic and foreign issues have impacted this volatility including the falling price of oil, economic troubles in Europe and Asia (especially in Russia), the absence of inflation in the developed world and additional tension with North Korea. While the Fed declared this week that it would be “patient” in deciding whether to raise rates, some experts are predicting increases as early as this spring.

In the meantime, lending rates for commercial properties remain very low. Lender spreads have widened a bit this month as treasuries have declined (partially due to issues mentioned above), but borrowing rates are still at or below where they were last month. No one knows how long this historic opportunity will continue, so many investors are trying to lock in rates today.

If you are evaluating an acquisition, have a loan maturing over the next year or can pre-pay an existing loan without much penalty, feel free to contact us to evaluate the various opportunities available including those mentioned below.

Property Types	Loan Types	Features
• Multi-Family/Apts. • Office • Industrial • Retail • Hospitality/Hotels	• Permanent - Life companies - Conduit (CMBS) - Banks • Bridge Loans	• Non-recourse (no guaranties) • Flexible Prepayment • Fixed Low Rates • Amortization Options including interest only
	• Mezzanine Loans
	• Construction/ Development

Interest Rate Analysis

Key Rates

Prime 5-Yr T 10-Yr T
1-M Libor
DJ Avg.

12/18/14 3.25% 1.66% 2.21%
0.16%
17,778

11/18/14 3.25%
1.60%
2.32%
0.15%
17,688

Year Ago 3.25% 1.53% 2.88% 0.17% 16,163

Interest Rate Projections*

4Q 14 1Q 15
2Q 15

3Q 15
4Q 15

10-Y Avg. 2.52% 2.72% 2.90%
3.09%
3.23%

Fed Fund 0.25%
0.25%
0.25%
0.25%
0.34%

1-M Libor 0.16% 0.17% 0.23% 0.43% 0.65%

*Bloomberg Monthly News 11/13/14, *Chatham Financial 11/24/14

Average 10-Year Treasury vs. 30-day LIBOR

Market Briefs

•

Commercial and multifamily mortgage loan originations increased 18% in the third quarter compared to the second quarter and were 16% higher compared to the third quarter of 2013, according to the Mortgage Bankers Association's (MBA) quarterly Commercial/ Multifamily Mortgage Originations report.

•

RCA reported that sales of significant commercial property totaled $37.6 billion in October, up 3% YOY, with the retail sector recording the most robust volume gains. Cap rates declined between 5-10 bps across most property types.

•

Not to toot our own horn (but we will), according to the CREF forecasts, CBRE will out-perform the market with an estimated 16% YOY origination growth compared to the overall market growth of 6% YOY for 2014.

Featured Transaction

International Park and Blue Lake Center properties span 377,921 square feet of Class A office space in one of Birmingham’s most sought-after submarkets, the 280/459 corridor, and were acquired for $51 million. The transaction closed in the last quarter of 2014 with non-recourse financing from a CMBS lender in the amount of $41 million at a fixed rate with a 10-year term.

Recently Closed Deals

Deal Asset Type SF Financing
Loan Type

Flagler West Corporate Park

Miami, Florida
Office 126,004 $20,750,000 CMBS/Mezzanine

Metrocentre Corporate Center
West Palm Beach, Florida Office 105,159 SF $7,000,000 Bridge Loan

Intl Park & Blue Lake Center

Birmingham, Alabama
Office 377,921 $41,190,000 CMBS

Oakland Park Industrial Center

Oakland Park, Florida
Industrial 145,260 $6,100,000 CMBS

Congress Office Park

Delray Beach, Florida
Office 53,843 $5,500,000 Life Company

Jupiter Medical & Tech Park

Jupiter, Florida
Medical/Office 185,000 $27,000,000 Bridge Loan

AT&T Regional Training Center
Fort Lauderdale, Florida Flex/Industrial 79,412 $4,900,000
Bridge Loan

Brandywine Centre I
West Palm Beach, Florida Office
69,715
$5,039,000
Bridge Loan

Cascade Apartments
Palm Beach Shores, Florida Multi-Housing 11 Units $650,000 Bank/Permanent

Wells Fargo
Delray Beach, Florida Office 15,890 $1,775,000
Bank/Owner-Occupied

Market News

Kroll Bond Rating Agency Releases 2015 CMBS Outlook

marketwatch.com -- Kroll Bond Rating Agency (KBRA) today released a report summarizing its views for the CMBS Industry in 2015. The economy, coupled with low interest rates, contributed to continued growth in the commercial real estate and securitization markets. Property fundamentals for most CRE segments improved, fueling the appetite for CMBS investment . .. ARTICLE CONTINUED

Financial Solutions

Our team provides “institutional” quality service to South Florida’s private real estate investors. Clients enjoy our experience, lender contacts and ingenuity in creating solutions for their financing needs. We place our clients first and provide personalized service to ensure they get the best loan terms for their investments.

This is a good time to lock in a long-term, low interest rate loan without personal guaranties (non-recourse). Please click here to see additional reasons I can best assist you and add value to your real estate investment needs.