The *Long-Term* Interest Rate Projection Discussion Board/Echo-Chamber
Hey All -
Obviously the market gives us a detailed picture of where they think rates are headed daily via the yield curves, fixed/floatingrates, and etc.... But I wanted to get the groups thoughts/projections looking PAST this rapid run-up of rates to , and start a bit of discussion regarding the true long-run stabilized fed-funds rate after this circus leaves town + the long-term impacts to our capital markets.
A few discussions points to kick us off...
-Was theera of interest rates & even lower COVID-era borrowing reflective of the market's additional education just how attractive MF/IND are from a risk/return POV, or just a beneficiary of low rates?
- Obviously we're coming off of all time low cap rates and record high rent growth... but let's break out the crystal ball and make some bad guesses about the future. Assuming the dot plot holds, inflation gets back under control, and Putin doesn't hit the red button... interest rates will glide back to 2.25-2.50%. Where do you think cap rates will settle (genral spreads, specific sectors, whatever your expertise) vs. the recent golden-era?
-Volatility = Opportunity. Any off the cuff guesses on long-term winners and losers on thewith the rapid rise in rates? - I think nimble groups with patient capital will have some great opportunities to realize long-term value by acting on pricing corrections. Also, I think Pref/Mezz/B-Piece players just shook their desks because they stood up while sitting down
- Is what we are seeing truly inflation, or just supply chai.... I'm just kidding, this as a notice that the thread is meant to discuss the impacts of long-term "normal" interest rates on pricing, capital markets, structuring, and everything else in the CRE world.
Let's speculate purely on what our CRE world will look like assuming interest rates of 2.25%-2.50% exist in 2025 once all cools down.
Edit: While I hope this discussion will be beneficial for incoming analysts, I'd just ask that we keep the talking points and threads on-track between monkeys currently in the weeds actively underwriting deals and signing LOIs. Feel free to DM me with questions on lingo/nuances instead of disrupting comment threads