8A — April 10 - 23, 2015 — M id A tlantic
Real Estate Journal
www.marejournal.com
F inancial D igest By Mark Scott, Commercial Mortgage Capital Locking in today’s low rates
T here is has been a rap- id rise in rates over the past three weeks. While many people are say-
rates decline, you can jump in and lock at these low levels. If rates continue to rise, you can be prepared to lock the rate when you feel ready. Once rates start rising, lenders will be swamped with deals and pipelines and delays will grow. Rate locks will be delayed as mortgage bankers scurry to underwrite loans Then, most importantly --secure the at- tention of the lender to focus on, and issue a quote and an application in order to lock a rate. All this takes time. Be ready. Indeed, Federal Reserve Chair Janet Yellen seems to
be setting the stage for rate hikes this year. She noted in her Semiannual Monetary Policy Report to the Congress that if economic conditions continue to improve, as the Committee anticipates, the Committee will at some point begin considering an increase in the target range for the fed- eral funds rate on a meeting- by-meeting basis. Before then, the Committee will change its forward guidance. However, Ms. Yellen said, “it is important to emphasize that a modification of the forward guidance should not be read as indicating that the Commit-
tee will necessarily increase the target range in a couple of meetings. Instead the modifi- cation should be understood as reflecting the Committee's judgment that conditions have improved to the point where it will soon be the case that a change in the target range could be warranted at any meeting. Provided that labor market conditions continue to improve and further improve- ment is expected, the Commit- tee anticipates that it will be appropriate to raise the target range for the federal funds rate when, on the basis of in- coming data, the Committee
is reasonably confident that inflation will move back over the medium term toward our two percent objective.” Though we can expect to see more transactions in 2015, there is still a level of uncer- tainty in the market, com- bined with continued confu- sion about the fate of interest rates. As a result, now is the time for borrower’s to lock in today’s low rates with a sea- soned mortgage professional. Call us. Mark Scott is principal of Commercial Mortgage Capital, based in Livings- ton, NJ. n CHCcloses $8.5 million loan Chatham, NJ — David Turley, Janet Proscia and Jeffrey Pacailler recently secured an $8.5 million CMBS loan for a Hampton Inn & Suites in a secondary Tennes- see market. The loan amount represents the client’s entire cost basis in the property. CHC successfully obtained a loan at 65% LTV on a 10/25. The interest rate was locked in the low 4%’s at a spread of 195bps over the 10-year Swap rate. CHC was also able to negotiate a full wavier of cash management for DSCR, a very attractive feature for the client. David Turley said, “This was a challenging assignment even at 65% LTV given the cash out and the property’s limited operating history. However, CHC was able to successfully communicate the strengths of the Property which were backed up by impressive per- formance metrics - occupancy, ADR and RevPAR - within its comp set.” “We ran a thorough mar- keting process,” added Janet Proscia, “and asked lenders to bid on both the economic and legal terms of the transaction. The client was very pleased to secure not just an attractive rate but also flexible terms that will make the loan easy to live with over the next 10 years.” n Hampton Inn & Suites
i n g t h a t rates will de- cline again, a number of Federal Re- serve presi- d e n t s a r e saying that t h e y m a y raise rates
Mark Scott
as soon as this coming July, or September. As a result, now is the time to prepare to refinance any loans on the next 18 month horizon. If
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