Commercial Real Estate Loans and the Impact of Rising Interest Rates on Commercial Real Estate
Beaverton, OR (ContentDesk) August 1, 2005 --
http://www.pacificsecuritycapital.com -- Pacific Security Capital ("PSC"), a leading commercial real estate investment bank, headquartered in Beaverton, Oregon, addresses the impact rising interest rates could have on commercial real estate loans and the commercial real estate market overall. There has been no shortage of conversation surrounding the topic of rising interest rates in the commercial capital markets over the last two years. Mike Myatt, Executive Managing Director of Pacific Security Capital explains that "the reason for all the column fodder is that interest rate movement has a direct impact on the state of capital markets supply and pricing and can have a very real impact on the overall commercial real estate market." As a baseline for a deeper analysis it is useful to have a macro-economic understanding of what happens to property level supply and demand drivers and the resultant impact on Net Operating Income (NOI) in a rising interest rate environment. As a general economic principal when interest rates rise the cost of new construction increases thereby slowing the number of construction starts and depleting new supply of product coming online. This scenario in turn causes an increase in overall market absorption rates and creates a "landlord's market" environment.
Myatt adds that "the environment which favors the landlord creates an opportunity for property owners to increase rents thereby allowing NOI growth to keep pace with any escalation in interest rates. While this scenario is favorable to existing property owners and making the rise in interest rates less of a concern, the impact to developers and tenants is detrimental and can have a negative overall impact on the economy if a high interest rate environment lasts for any length of time."At a more micro level some of the major issues surrounding the impact of increasing interest rates on commercial real estate loans and commercial capital markets are addressed below: Flow of Funds: In a low interest rate environment real estate provides a reasonable investment alternative to other low yielding asset classes. With rising interest rates the supply-side availability of capital marked for commercial real estate will constrict. The aforementioned contraction will be due to a combination of reduced demand for new supply as weaker developers are weeded out of the market and alternate investment opportunities in other asset classes begin providing a better yield while being perceived to have less risk when contrasted to commercial real estate investments. Loan Pricing, Sizing and Cost of Funds: The overall blended cost of capital will increase dramatically.
This dramatic increase will come not only as a result of rising rates across underlying indices but moreover as a result of lower advance rates in the senior position shifting a higher percentage of the capital structure up in the leverage curve. The reduction in LTV and LTC advance rates will cause a borrower to rely more heavily on mezzanine and equity financing resulting in shift from the current "borrower's market" climate to a "investor's market" environment. Investment Sales: Sales of investment grade properties will slow rapidly as many of the buyer's in today's low interest rate environment will move to the sidelines. Institutions and REITS will remain active buyers while many of the individual investors will be forced from the investment sales market. Default rates will climb and more distressed property will come onto the market as investors who leveraged up on floating rate debt during the low interest rate environment will have a hard time keeping control of property as their debt service obligations increase.
Commercial real estate owners who believe that interest rates will rise substantially and will remain elevated for any period of time should be looking to refinance short-term commercial real estate loans, floating rate debt with long-term fixed rate debt. Buyers looking to acquire investment property should look for assets with upside potential for NOI growth through improved management and upside pop in leasing opportunities. About Pacific Security Capital Pacific Security Capital is a leading commercial real estate investment banking firm providing commercial real estate loans, structured finance, investment sales and advisory services. The combination of direct lending, advisory, intermediary, corporate and professional services, syndication and acquisition services consistently allow PSC to rank among the leaders in the industry. PSC is headquartered in Beaverton, Oregon with other offices in major markets in North American and Europe.
More information about the company can be found at www.PacificSecurityCapital.com.
Author And Real Estate Expert Offers Free No Cash No Credit Real Estate Seminar To Katrina Victims
Clearwater, FL (ContentDesk) February 15, 2006 -- Adriana Dodge watched helplessly as did many Americans, as Hurricane Katrina wreaked havoc on New Orleans. Struck by the number of people who had no cash and no credit with which to rebuild, she recognized an opportunity to help by providing her No-Cash, No-Credit Home Buying Seminar and books to those devastated by the hurricane.Adriana arrived in the United States in 1986 from her native Columbia with $700 in her pocket and no credit and worked in low-paying jobs until she discovered a way that almost anyone, even with no cash and no credit or even bad credit, could buy a home. Adriana began using the process and built a successful
Author And Real Estate Expert Offers Free No Cash No Credit Real Estate Seminar To Katrina Victims 
Real estate > Author And Real Estate Expert Offers Free No Cash No Credit Real Estate Seminar To Katrina Victims
Full-Featured Real Estate Discussion Forum Launched by Homefindinginfo.com
Zephyr, TX (ContentDesk) May 29, 2006 - Homefindinginfo.com, a leading online real estate resource center, launched a full featured real estate forum this week catering to home sellers, home buyers, and real estate agents.The new discussion forum allows home buyers, sellers, and licensed real estate agents to discuss any real estate related subject in a centralized online location.
The new forum allows users to join and subscribe to any or all discussion threads of their liking, as well as customize their discussion experience by opting in to the email notification of new posts in their topic of interest. Weve now established a forum where buyers and sellers can find answers to their specific real estate questions and concerns, said Cameron Novak, director of marketing for Homefindinginfo.com.
It was yet another step in establishing our site as the leading portal connecting buyers and sellers with Top Rated agents in their area who can provide expertise to those...
Real estate > Full-Featured Real Estate Discussion Forum Launched by Homefindinginfo.com
The Golden Rule of Real Estate Investing
The first rule you need to learn when it comes to investing in real estate is to never fall in love with a property. Keep your emotions in check. Houses are just another deal. You don't get attached to a stock or a mutual fund and hang on to it because its been in the family for 50 years so why would you treat real estate any different?
When you let your emotions make your decisions you have lost the battle. You have lost control of rational logical thought.
Just think about how silly you act when you fall in love with someone. You do all kinds of stupid things only to look back and think if only.
Real estate investing is a business and just like any other business you have to make intelligent informed decisions based on facts not feelings. Now I don't mean gut instinct type of feelings like this is a good deal or bad deal feeling. I am talking about dream type feelings when you throw caution to the wind and do what feels right instead of doing...
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Arizona Real Estate - A Perfect Place For Settlement
Arizona, a large state in the Western United States, also known as Grand Canyon State, is famous for its astonishing landscapes, soaring mountain ranges, rivers, grasslands, forests and beautiful weather. Arizona valley constitutes of all these and makes it a perfect place for vacation, retirement, land investment or for permanent settlement.
Over the years, Arizona real estate has become the most sought after real estate in the United States. Real estate market of Arizona is huge and is one of the most commendable real estate markets in USA. The real estate in Arizona is full of luxury houses, apartments, buildings, beautiful decorated homes that draw attention not only from people of the United States but also from other countries.
For anyone planning some investment in the real estate market, Arizona real estate market is the ideal place to start.
The state has witnessed record appreciation levels. Any sort of investments done in the commercial...
Arizona Real Estate - A Perfect Place For Settlement
Real estate > Arizona Real Estate - A Perfect Place For Settlement