How is the interest rate fixed on a CMBS conduit loan? In the loan Term Sheet, under Interest Rate, the provision indicates that the interest rate will be set by adding the loan “spread” (expressed in basis points; i.e., “250 basis points”) to the Swap Rate with same term as the loan. If the loan is … [Read more...] about 8.10.20: A REFRESHER — HOW AND WHEN IS THE INTEREST RATE SET ON A CMBS CONDUIT LOAN?
The Federal Open Market Committee ended its two-day meeting on Wednesday holding its key interest rate near zero and signaled it likely won’t lift the key interest rate until at least 2022, noting the outbreak “will weigh heavily on economic activity” and “poses considerable risks to the economic … [Read more...] about 6.10.20: FEDERAL RESERVE SIGNALS LOW INTEREST RATES TO CONTINUE
Interest rates for CMBS conduit loans have fallen to historic lows as the death toll from China’s coronavirus outbreak continues to rise, rattling investors worried about the financial impact on the world’s second-largest economy. In the United States, equity prices have gyrated, while Treasury … [Read more...] about 2.3.20: INTEREST RATES TUMBLE TO UNDER 4% FOR CMBS CONDUIT LOANS ON CORONAVIRUS OUTBREAK
Unlike many commercial loan programs, CMBS conduit loans can provide for partial interest-only loan payments as well as full-term, interest-only loan payments for lower leverage loans. This structure provides higher cash flow after debt service to the sponsor, and it can be particularly useful in … [Read more...] about 12.2.19: REMEMBER: INTEREST-ONLY LOANS ARE AVAILABLE IN CMBS!
Here are the specifics on how the interest rate is fixed on a CMBS conduit loan: In the loan Term Sheet, under Interest Rate, the provision indicates that the interest rate will be set by adding the loan “spread” (expressed in basis points; i.e., “250 basis points”) to the Swap Rate with same term … [Read more...] about 9.23.19: How and When Is the Interest Rate Set on a CMBS Conduit Loan – A Refresher
Interest rates on CMBS conduit loans have decreased significantly in the last 30 days. Low leverage CMBS conduit loans (50%-60% LTV) are being quoted in the 4.25%-4.50% range, while full leverage (70%-75% LTV) loans are available at rates under 5.0%. Rates this low have not been available for a … [Read more...] about 3.26.19: Interest Rates Fall Substantially for CMBS Conduit Loans
Cap rates for income-producing properties have fallen to 5% or below in many primary markets, including New York, Los Angeles and San Francisco. As a result, borrowers seeking 75% Loan-to-Value (LTV) loans are finding that loan proceeds are constrained below 75% because the property cash flow does … [Read more...] about 4.13.18: How Interest-Only Can Solve DSCR Constraints on a CMBS Loan
Recently, JPMorgan sent a notice to its clients that did not mince words regarding its thoughts on the direction of interest rates: As the U.S. economy continues its expansion, we believe that U.S. interest rates will begin to rise. Many important indicators have shown notable strength of late, … [Read more...] about 6.17.15: JPMorgan Preps Clients for Direction of Interest Rates
The debate on the potential impact of rising interest rates on REIT stocks continues. Since a Real Estate Investment Trust (REIT) must pay out at least 90% of its taxable income as a dividend to investors, REIT stocks are relatively high-yielding investments. Investors are debating the sensitivity … [Read more...] about 5.22.15: Are REIT Stocks Impacted by Increased Interest Rates?
The Small Business Administration's (SBA) 504 loan program is providing long-term, fixed-rate financing for commercial real estate and the purchase of long-term capital assets at the lowest interest rates since the program's inception. The debentures that funded this month's 20-year 504 loans were … [Read more...] about 9.8.11: SBA 504 Loans Hit Record-Low Interest Rates for September