No surprise Fed is hiking. It was expected. However, I think the speed at which they plan to do it is a bit more aggressive than expected. 7 hikes expected in 2022. They are projecting a 2.8% fed funds rate in 2023.
We imagine we'll be having these discussions with our equity very soon on this. What are your thoughts? Do you think your firms are going to change up their strategies? Do you think they'll hold off on acquisitions? For those on the investment sale side, do you see transaction activity slowing from owners stuck in assets and buyers underwriting higher IRR/cap rates?
My shop (MF development) isn't really changing it's acquisition/development pipeline in any meaningful way because of interest rates. Inflation is a bigger concern for us because of construction costs being a primary driver of profitability.
That being said, our affordable deals are becoming much more difficult because our debt products are providing fewer proceeds. I have a project that is supposed to close on our construction loan in a few months and we might see half our developer fee go up in smoke simply due to interest rates, and another project that might get shelved permanently because of it, I don't know how people are getting LIHTC deals done right now.
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