Will interest rates increase twice this year?

embedYes, investors, interest rates will go up this year.

Here’s the question we really want answered: Will two rate hikes happen before Christmas?

Historically, multiple successive rate hikes have followed a period of prolonged low interest rates. This was the case at the conclusion of the low-rate periods of the early 1990s and mid 2000’s. Read more

Why are newer multi-family loans defeasing ahead of schedule?

14425526680_d34d3b66e6An interesting trend is developing in the multi-family CMBS space: Newer vintage loans are defeasing much earlier in their terms than older 2005- to 2007-vintage loans.

Why? Defeasance economics are turning in their favor. Let me explain. Read more

Newer multi-family defeasances increase as Wall of Maturities nears

14425526680_d34d3b66e6Over the past several years, multi-family loans have consistently defeased in greater volume than any other property type.

Due to sustained low rates and continued strength in the sector, owners of multi-family properties are moving at a quickening pace to defease loans against their properties. The intent is to maximize proceeds from disposition or refinance loan proceeds as the Wall of Maturities inches closer. Read more

Are smart retail borrowers defeasing now?

Borrowers sprinted to defease their retail properties in the early months of 2015.

graphicAbout 300 percent more borrowers defeased loans for retail properties in the first quarter this year compared to 2014, according to a Defease with Ease® analysis of Bloomberg data. The trend signals the Wall of Maturities, along with fear of rising rates, is prompting a greater sense of urgency to consider a sale or refinance of their CMBS loan early. Approximately $300 billion in defeasance-eligible loans will mature between now and 2017. Read more

Peering over the Wall of Maturities

3wBPUcDrR9KaduD3PvkY_DSC_0915The Wall of Maturities has arrived. Are you ready to scale it?

Hundreds of billions of dollars in commercial real estate loans will mature over the next three years as thousands of 10-year CMBS products from 2005-2007 reach full-term. Approximately $300 billion in defeasance-eligible and prepayment-eligible loans are set to mature.
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Redefining the Traditional Office Space

Redefining Office Space PictureAccording to a recent article by Richard Carr of National Real Estate Investor, there is “growing preference for open spaces over traditional offices, efficiency over expansion, secondary markets over class-A buildings in primary cities and, in some markets, a new trend of preferring low-rise buildings or lower floors in high-rise buildings to higher-priced floors at the top.”
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CRE Market Conditions Stable – Defeasance on the Rise

round-glass-building-1123032-mLast week, the Federal Reserve released its report on regional economic conditions, which summarized district information from each of the Federal Reserve Banks. Based on the information contained in the report, it was clear that bank branch directors agree that the commercial real estate market is stable or improving in most districts.

The report, which is formally called the “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” evaluates the regions in which Federal Reserve Banks are located. For example, the “Boston” report describes all of New England and “Chicago” pertains to most of the Midwest.
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Multifamily is where it’s at in 2015

Last week, members of the Commercial Defeasance team attended the RealShare conference in Miami. During the conference, over 250 CRE leaders discussed issues and trends related to the multifamily sector in the Eastern U.S.
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It was clear that attendees wanted to know if a decrease in home ownership is a paradigm shift or a demographic shift. They also discussed how certain trends are benefiting the multifamily industry.

According to recent statistics, the U.S. homeownership rate fell to the lowest level in more than two decades. This has caused vacancy rates for rental homes to decrease. U.S. vacancy rates for rented homes fell to 7 percent in the fourth quarter, down from 8.2 percent a year earlier and the lowest since 1993.
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The Future of Retail

Until recently, street retail throughout the country had fallen out of favor and into disrepair. Millennials and empty nesters are moving back to the cities, and investors are once again increasing their portfolio allocation in the street retail category.
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“We’ve been in street retail for a long time, but it’s a greater focus for us now,” says Christopher Conlon of Acadia Realty Trust. “Previously, street retail made up a much smaller percentage of our portfolio, but we chose to make it a big part of our growth plan coming out of the recession.”
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Commercial Loan Originations on the Rise

According to Jamie Woodwell, VP of Commercial Real Estate Research at the Mortgage Bankers Association, “Rising property values, improving property fundamentals, lower interest rates and higher loan maturity volumes should all help boost mortgage borrowing and lending in the coming year.”
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The Mortgage Bankers Association (MBA) predicts that originations of commercial and multi-family mortgages will grow to $414 billion in 2015. This is an increase of 7% over last year.

In fact, according to the MBA’s quarterly survey of the top commercial and multi-family mortgage originations firms, there was an 11 % increase in loan originations during the fourth quarter of 2014. Multi-family and industrial properties had the most loan originations during that time period.
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