2021 Year End Observations for Commercial Real Estate Finance

As the year comes to a close we would like to highlight some of our observations from 2021. The economy continued to recover in most states across the country propelled by the reopening of the economy and unprecedented fiscal and monetary stimulus. The Ratio of Government Debt to GDP is highest in the history of the United States and Inflation has been rising. Government Debt is dangerously high and the risk of a Debt Trap is a real. The stock Market/Equities are near All-Time Highs as well as P/E Ratios which suggest Equities are over levered. Junk bond yields are at all-time lows trading below 5%. There is so much liquidity in the market looking for any kind of yield, and yields are being forced lower on all fronts which brings up the all-important question, Is the risk worth the rewards? The current 10 Year Treasury Yield is 1.51%, still very close to historically low yield. Banks, CMBS, Bridge, Insurance, and opportunity lenders have continued to lend on real estate as the fundamentals of underwriting have remained true after the 2008 meltdown.

Recently Closed Transactions:

$12.5M Refinance - Garden Style Affordable Multifamily – 2.95% fixed for 10 years, Interest Only for 5 years, 95 units, 60% LTV, Non-Recourse
$28M Acquisition Financing – SOFR + 2.25%, 75% of Acquisition Price, 7 year loan, Interest Only for 3 Yrs – 225,000 SF, 100% leased

For a more detailed list of transactions, Click Here