Mid Atlantic Real Estate Journal — Mid Year Review — June 22 - July 12, 2012 — 1B
www.marejournal.com
C REATIVE F INANCING By Mark Scott, Commercial Mortgage Capital Europe crisis provides ONE more opportunity
C
ontinued drama in Europe is providing an opportunity for prop-
threat of deflation. In early June not only did several large life companies place
Prepay existing loans: While the worst is hopefully over, volatility like we are
ties all clients of CMC have examined their portfolio of loans and evaluated lock- ing forward rates or paying prepayment penalties to re- finance. All borrowers should be refinancing loans with Fixed prepayment penalties and calculating any Yield maintenance penalties they may have. Loans which pre- viously looks very expensive to prepay are now looking like candidates to lock in, take out additional proceeds and enjoy today’s sub 4.0% rates on 10-20 year loans. Even check your home mortgage. Although I recent-
ly locked in a low rate, recent rate declines have presented another opportunity with the same lender to enjoy an inexpensive rate reset. Mark Scott is president of Commercial Mortgage Capital headquartered in Livingston, NJ. Mark can be reached at mscott@ newcommercialmort - gage.com. In 2012 thus far, CMC has arranged over $200 million in refinanc- ing of existing proper- ties. In addition CMC has arranged over $100 mil- lion in new multifamily construction financing. ■
e r t y own - ers to lock in hi stor i - cally record low financ- i ng r a t e s . On June 1, 2 0 1 2 , t h e benchmark 1 0 - y e a r
Continued drama in Europe is providing an opportunity for property owners to lock in historically record low financing rates. On June 1, 2012, the benchmark 10- year Treasury notes yield hit an intra-day low of 1.442 percent, the lowest level since the early 1800s.
Mark Scott
floors on offering rates, sev- eral temporarily closed their doors and exited the market. To mortgage bankers, lenders exiting the market is reminis- cent of the post Lehman days and 2008.
seeing should encourage property owners to look for- ward, payoff loans and lock in today’s record low rates while they can. It’s time to look at all exiting mortgages for prepayment opportuni-
Treasury notes yield hit an intra-day low of 1.442 per- cent, the lowest level since the early 1800s. This was caused by a flight to safety, as investors moved their money out of Europe and the stock market. (Source: Reuters, Weak jobs data knock yields lower, June 1, 2012) On that day, the yield curve was: • .07 for the 3-month Treasury bill • . 17 f o r t he 1 - yea r Treasury note • 1.47 for the 10-year Treasury note • 2.53 for the 30-year Treasury bond Yields are abnormally low due to continued economic uncertainty. Investors ac- cept these low returns just to keep their money safe. Once the global recovery is in full swing again, Treasury yields should increase. In the past 30 days proper- ty owners have crowded into 15 year refinancing of their properties. At Commercial Mortgage Capital (CMC) we have seen record volume in June as borrowers lock in 15 year money. Recent quotes on lower leverage multifam- ily loans have hit 3.25%, 3.30%, 3.47% and 3.53% on four recent transactions. Multifamily continues to enjoy much tighter financing spreads (low 200’s basis point spreads) than commercial properties (three hundreds basis point spreads +) over an average life or 10 year trea- sury in the 1.44% to 1.70% range. In light of these record low rates, many lenders have placed “floors” on rates they are offering. Volatility continues: Al- though the Greek vote bode well for the Euro, expect more volatility this sum- mer. The capital markets are scared. Fear is rampant. Lenders are concerned for stability in Europe, the U.S election, lackluster or non- existent job growth and the
CMC - Closes $66,400,000...
Commercial Mortgage Capital Commercial Mortgage Capital has arranged permanent mortgage financing totaling $66,400,000 for six multi-family properties located in NJ & NY during the first six months of 2012 Mark Scott, Principal 615 West Mt. Pleasant Ave. Livingston, N.J. 07039 973-215-2409 eFax 201-787-7111 mobile
Properties : • Station Court • Madison Gardens • Columbia Court • Riverbend (ph. 2) • Dartmouth Vlg. • Andrews Corner
(973)716-0006
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