Great podcast on the financing market for CRE and apartment building investment with a look at potential impacts from events around the world.
“In this Global In-Sights podcast, Spencer Levy, Executive Managing Director for CBRE Capital Markets, shares his view on the commercial real estate debt and equity finance markets. What are current key sources of capital, what is the current pricing of CRE debt, and what are expectations going forward? Are there key sectors that are attracting most of the capital flows? What are expectations for interest rates and how are investors underwriting the possibility of an interest rate spike in the next 2 to 3 years? What are some of the key positive trends that we suggest our clients look out for when selecting markets in which to invest?”
A few bullet points:
- More commercial lending sources becoming available.
- Some life companies beating Fannie and Freddie on apartment investment deals.
- Rates in the 4-1/2 to 5 and change range based on a spread over benchmark.
- Interest rates are likely to rise because of improving economy and inflation.
- Cap rates won’t necessarily rise with interest rates because of improving fundamentals and inflation.
- Investors can pick up a yield premium by going to secondary and tertiary markets with flexibility in their exit.
- The tidal wave of distressed assets we’ve all been waiting for with dreams of RTC 2.0 isn’t really going to happen because of accounting gimmickry at the banks, bailouts and improving fundamentals.