How will the interest rate cut affect CRE?
What do yall think? I haven't been around long enough to know what is going to happen to curious to yalls thoughts. Seems like a recession is almost definite, but will it have much impact on CRE?
I hope so
Do you think people will wait for prices to drop or buy now and lock in long term low rates?
The lenders I've spoken to are generally confused as all hell right now, and as such, are not doing much of anything. Pulling term sheets, not giving much guidance on rates, etc.
For the most part my bank is business as usual and we have not slowed down lending nor do we plan to as of right now. There have been discussions of implementing a LIBOR floor of 1.00%, though.
That's reassuring!
Same here at my bank. Rather than pulling back we're just making some tweaks that give us the flexibility to adjust as needed. One is shortening the expiration dates on term sheets so we have the ability to re-visit pricing with the client if for some reason rates keep falling (though unless Fed decides to go negative, not sure that'll happen).
We're encouraging term lending and refinances. We bumped spreads 15 bps for 5 and 7 year loans and 25 bps for construction, and are hearing some other peer banks are as widening as well. LIBOR floors seem to be a big point of contention in on-going loan doc negotiations. Our Agency group said Fannie and Freddie are widening spreads but deals are still being quoted as of today.
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I've experienced the same thing, especially w/ CMBS. I think folks are going to sit still for a few weeks and see how things shake out.
any conversations around various asset classes?
i am in MF...a lender I spoke to this morning said they are in a hold pattern. hard to underwrite tenants inability to pay rent in the service industry. any thoughts on industrial? while a strong sector, i imagine the supply chain concerns with so much of our sh*t coming from china to impact pricing and rents? retail and hotels are toast. not sure how to think about office.
thoughts?
Haven't heard much about a pause for MF, but obviously hotels and retail volume will slow. We're concerned about student housing projects as well; will depend on if colleges decide to cancel the school year. As long as students are taking classes online at home, things should be good. Worried about a drop in pre-leasing for student housing projects under construction slated to open next semester.
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