Credit Agencies Under Fire for High Ratings on Bonds Linked to Failing Properties
Despite properties facing foreclosure, credit agencies continue to assign high ratings to bonds associated with these struggling commercial buildings, according to the Financial Times. This raises serious questions about the reliability of these ratings. A Concerning Pattern: Credit agencies have been criticized for misrating over $100 billion in commercial real estate (CRE) debt. This issue…
Read MoreRetail Sales Dip Again, Bolstering Case for Rate Cut
May experienced another weak period for consumer spending, reflecting the ongoing impact of deteriorating economic conditions on American households. Retail Report Recent data shows that retail sales in May saw a slight 0.1% increase after a 0.2% decline in April. Among the 13 tracked categories, five experienced declines, influenced by lower gasoline prices and Memorial…
Read MoreAdjusting to Transformation
In 2023, there was a notable increase in adaptive reuse projects, particularly in the conversion of outdated buildings into apartments, marking a 17.6% rise compared to 2022. According to RentCafe’s latest report, approximately 12.7K new apartments entered the market through adaptive reuse, a return to levels seen in 2019–2020 but still below the peak in…
Read MoreToday’s Commercial Mortgage Rates
Commercial real estate (CRE) prices have experienced a 3% drop compared to last year, as indicated in a recent analysis by MSCI. The report notes that the RCA CPPI National All-Property Index fell by 3.0% year-over-year, with a modest 0.2% decline from the previous month, suggesting a slowing in the pace of price decreases, particularly…
Read MoreUnveiling the Scale of Commercial Real Estate Loan Maturities: A Deep Dive
Recent insights on Commercial Real Estate Loan Maturities from Newmark shed light on the looming challenges facing banks across the United States as trillions of dollars in property debt approach maturity in the coming years. According to their latest report, a staggering $2 trillion maturity wall of commercial real estate (CRE) loans looms over the…
Read MoreExploring Fresh Avenues: Equity Investors Amid Declining Debt Offerings
As debt offerings dwindle, equity investors are discovering fresh avenues within the CRE sector. With lenders imposing stricter conditions, the landscape is evolving, necessitating a shift in deal structuring and financing approaches. Notably, MSCI data reveals a consistent decline in loan-to-value (LTV) ratios, with CMBS providers reducing LTVs by 14% between 2015 and 2023. This…
Read MoreTik Tok – Tik Tok – Tik Tok…
The clock is ticking – New York City’s Local Law 97 mandates landlords to decrease emissions or encounter penalties, effective this year, with the initial penalties slated for imposition in 2025. Beginning next year, building owners failing to achieve a 25% reduction from the 2006 baseline in emissions could incur financial consequences. By 2030, a…
Read MoreCRE is waking up from a Cheap Money Hangover!
The US commercial real estate sector is at a critical juncture, grappling with significant challenges. Lenders have been grappling with troubled loans, banking on potential intervention from the Federal Reserve that has yet to materialize. Just before Federal Reserve Chairman Jay Powell announced that benchmark interest rates would hold steady between 5.25% and 5.5%, Colin…
Read MoreBracing for Impact
Prepare for Impact When commercial mortgage rates reset on your property, it can have a significant impact on that property’s ongoing performance. It’s never too early to prepare for the adjustment and plan proactive countermeasures. Commercial mortgage rates are often fixed for a period, typically five to 10 years, after which they reset to a…
Read MoreFrom LIBOR to SOFR – Preparing for The Transition!
LIBOR has long acted as the primary benchmark for interest rates around the world. Come 2022, however, this will no longer be the case. As the financial world transitions over to SOFR many market participants are left wondering how they’ll be affected and what they can do to prepare. What is LIBOR? For the last 50 years,…
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