what a difference a year can make. Let's talk cap rates vs interest rates:
Good exercise… it does ignore though that NOI has grown strongly in the time interest rates have increased, hence current picture is not as bleak as it may seem… also, band of investment approach for extracting cap rate is great in theory, but does not typically reflect actual cap rates being transacted in the market
Time to dust off the workout skills…
HP Sori when does your "crystal ball" see the change coming in commercial real estate values? Seems in Indiana there is still enough cash around that overpriced (?) real estate is still desirable probably as a hedge for inflation. How leveraged is the average commercial investor these days? And then does it make sense to wait in the wings a little while at this point?
Roshy R.
1y
Crazy, cap rates have to move up for this to make sense, NOI is not sufficient for debt payment, and forget about any cash flow to investors after that :(
Ruben Pedron
1y
Sobering illustration.
Yes but this is transitory :)
Raul Ramirez
1y
Wow
Jim Miller
1y
Pulling out the old Band of Investment model to illustrate the expectation of a refi challenge
CRE Credit Officer, Senior at SYNOVUS
1yFirst mistake is making a 70% LTC/LTV loan with only a 6.6% DY and a 1.19x DSCR on a 3.75%/30yr. Good news this cycle is I don’t know many or even any Commercial Banks in the Southeast that would have done that. The above IR scenario, wherever it settles out, will nonetheless have impact and certainly can make refi’s in the coming years more interesting for sure. Sing it with me “R E C-(C you real soon)- O U R C E”….(oops, I think I might be dating myself with that song).