M id A tlantic Real Estate Journal — Financial Digest — Tax Issues/Accounting — July 22 - August 18, 2022 — 9A T ax I ssues /A ccounting Mark Scott, Commercial Mortgage Capital Are those storm clouds on the horizon?
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s all of us are expe- riencing, there are many changes in the
other sources of real estate capital have stepped to the sidelines on the hottest asset class of multifamily and also in industrial. Previously we might have expected a 50- 70% positive response rate of retail center or office building (for reasons don’t have to be explained here). Now to see increasing lender rejections, in conjunction with rising rates should be a concern for all of us in the CRE industry. As I said…. We all saw this coming! The Fed warned us. Many of us didn’t want to see it. Many of us didn’t
banking system as bank after bank exits the lending market. Multiple regional banks are currently no longer locking or committing to rates in this market. Many have shuttered new originations, and several are reneging on Term Sheets and threatening to not honor commitments and /or re-trade and adjust previously agreed upon rates. Changes in lend- ers pipelines may be under- standable (or in their opinion justified); remember that MAC or Material Adverse Change clause that appeared after the great recession?? The MAC is
being used now. The real storm cloud is that suddenly small and regional banks are starting to question how to underwrite the future and thus have exited the market. It is not just one or two banks, but it is certainly more than a handful and growing. Loans that used to be placed rather easily, 60% LTV multifamily loans, in- stead of getting 10 bids from 10 banks contacted, suddenly that positive response rate has dropped to 7 of 10 banks. So now 30% of banks and life insurance companies and
want to believe it (yours truly included). The velocity of the changes we are seeing, rising inflation, rising interest rates, and now lenders exiting the market does indicate stormy days ahead. It may be time to get your umbrella out! Commercial Mortgage Capi- tal, a proud partner of US Re- alty Capital, leverages strong, long-term relationships with a national network of lenders to create innovative debt & equity solutions. Mark Scott is founder and principal of Commercial Mort- gage Capital Corp. MAREJ
e c o n omy afoot. Plenty of changes in the world political and economic out- look as well as the issues here at home. Most appar-
Mark Scott
ent to all of us are rising en- ergy costs as we refuel our cars. Rising food prices at the grocery are raising un- certainty in the markets. The War in Ukraine, its impact on raw material prices and food prices, is still just beginning to filter through the system. These inflation factors (CPI In - crease 7-9%) are yet to be fully reflected in interest rates. We have seen interest rates rise more than well over 150 basis points in the past 12 months. It is taught in business school that interest rates equal the REAL rate plus the INFLA- TION rate, thus, maybe rates should be in the 7-9% range? We all saw it coming. The Fed promised 6-8 rate increases in the future and many of the investment banks are indicat- ing we could see 8-10 Fed rate bumps in the near term. The cost of short and long term debt is on the rise. The economic volatility, the quick rise in rates, equities in correction and bear market territory, have resulted in those storm clouds that I see building on the horizon. The storm clouds consist of chang- ing liquidity levels in our CRE MMCC arranges $4.8M in financing for a Rite Aid in Monroeville, PA MONROEVILLE, PA — Marcus & Millichap Capi- tal Corporation (MMCC) has arranged $4.8 million in financing for a Rite Aid prop - erty, located at 4111 William Penn Highway in Monroeville. The financing was secured by MMCC’s Jared Cassidy , first vice president, based out of the Washington DC office. The 65% LTV loan has a 10-year term, 30-year amorti- zation and an interest rate of 3.63%. The property is located directly across the street from the Miracle Mile Shopping Center. MAREJ
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COMMERCIAL MORTGAGE CAPITAL
2022 CLOSINGS TO DATE
$4,387,500 Mixed Use Montclair, NJ Acquisition Loan $14,800,000 120 Multi-family Units
$12,700,000 222 Multi-family Units Parsippany, NJ Refinance $28,500,000 126 Multi-family Units Netcong, NJ Acquisition Loan
Ewing, NJ Refinance
$12,000,000 Warehouse Yonkers, NY Acquisition Loan
$27,000,000 400 Multi-family Units Parsippany, NJ Refinance
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