How to size Fixed vs Floating in today’s market
From a borrowers perspective. We are acquiring an asset that we plan to hold for 5 years. What’s the best way to evaluate? Just simply SOFR curve projection vs fixed?
From a borrowers perspective. We are acquiring an asset that we plan to hold for 5 years. What’s the best way to evaluate? Just simply SOFR curve projection vs fixed?
+52 | Leave brokerage to be GP | 12 | 1d | |
+46 | New Comp Database - Google Form (Now with Data Validation) | 24 | 1d | |
+24 | Seeking Career Guidance in Real Estate Development Post-Graduation | 3 | 2d | |
+23 | Spreads over SOFR/UST | 5 | 2h | |
+23 | Going out on your own | 4 | 1d | |
+22 | REPE/Development GPA | 15 | 4d | |
+21 | Real Estate = complicated + underpaid | 15 | 1d | |
+18 | High achiever that doesn’t want to work weekends | 8 | 18s | |
+17 | Fisher Brothers | 6 | 1d | |
+17 | MSRE/MSRED with no RE experience; Naive to think I’ll land a job afterwards? | 4 | 5d |
Career Resources
Associate 1 in RE - Comm, way too quiet in here. What about these resources:
More suggestions...
If those topics were completely useless, don't blame me, blame my programmers...
Depends... do you want to take floating rate risk or fixed rate? Most fixed rate product will be much lower leverage. If you take a floater, what will the rate cap requirements be?
I think you probably want to run multiple scenarios and obviously be mindful to build your model that you can quickly make adjustments to the index rate, strike price on cap, spread, etc.
Probably helpful to call a reputable mortgage broker in your market, they can guide you through it. Plus a good mortgage broker should be able to canvas the market & get you the best terms available today.
Think you're on the right track. Agree on mortgage broker unless you have some relationship lenders.
For fixed model the corresponding term UST + top end of broker quoted spread + fees.
For float SOFR curve + top end of broker quoted spread + fees. I would also model a SOFR floor ~150 bps lower than index at close and a rate cap.
Prepay structure seems like it is/should be on your radar here.
There are a lot of small details in the docs that move the needle just as much as spread but that varies lender to lender.
Also everyone wants 5Y fixed right now and lenders are being very selective with this product right now.
Id sed voluptatem pariatur atque aut quia animi enim. Doloremque aut et alias repellendus fugit laborum. Odio consequatur omnis dolor tempora voluptatem quo inventore. Excepturi et a quasi placeat dolorem doloremque exercitationem. Nihil aut ut veniam ipsa nihil.
Et enim placeat cumque nihil. Velit quia ut sed laborum. Rerum nisi est id ut quam modi quod sed. Iste dolores quam reprehenderit cumque minus aut.
Omnis voluptas amet quo voluptas sunt quo. Qui dolorum enim est ad quasi.
Dolor aut est optio est quisquam perferendis consectetur. Dignissimos quis maiores eaque voluptas. Sit esse eligendi commodi possimus et minus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...