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Capital Markets

Timely News on the Capital Markets and How it May Impact You

It looks like interest rates are going up. It may be time to Refinance.

  Submit Capital Request   Federal Reserve Chairman Ben S. Bernanke is putting investors on notice that the central bank is prepared to begin phasing out one of the most aggressive easing programs in its century-long history later this year. The Fed will probably taper its $85 billion in monthly bond buying later in 2013 and halt purchases around mid-2014 as long as the world’s largest economy performs in line with Fed projections, Bernanke told reporters yesterday in Washingtonafter a two-day meeting of the Federal Open Market Committee. “The vast, highly unprecedented, highly accommodative monetary policy stance that’s been so supportive of the recovery has begun to turn,” said Michael Gapen, senior U.S. economist for Barclays Plc in New York and a former economist in the Fed’s Division of Monetary Affairs. “The markets for the next several years or more will have to deal with the withdrawal of that support.” Stocks and Treasuries tumbled at the prospect of a wind-down in bond buying that’s swollen the Fed balance sheet to a record $3.41 trillion in an attack against the worst joblessness since the Great Depression. While citing waning risks to the economy, Bernanke said curbs to bond buying hinge on gains in the labor market and a pickup in growth. The yield on the benchmark 10-year Treasury (USGG10YR)note rose 3 basis points, or 0.03 percentage point, to 2.39 percent at 10:11 a.m. New York time after earlier climbing as high as 2.47 percent, the highest since August 2011. The yield jumped 17 basis points yesterday, the most since October 2011. Yields Surge Bonds across the Asia-Pacific region fell, with Japan’s 10-year yield climbing 4 basis points to 0.86 percent. The yield on 10-year German bunds rose 9 basis points to 1.65 percent. TheMSCI Asia Pacific Index (MXAP) of shares slumped 3.9 percent and the Stoxx Europe 600 (SXXP) Index slid 2.6 percent. The Standard & Poor’s 500 Index (SP1) fell 1.4 percent. Gold fell below $1,300 an ounce to the lowest in since September 2010. The conclusion to record stimulus may take years to complete as the Fed’s forecasts showed most officials don’t expect to begin raising the benchmark lending rate out of its lowest-ever range of zero to 0.25 percent until 2015. Bernanke, 59, whose second term as chairman ends on Jan....

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Promote Structures of the Most Active Real Estate Funds

Promote Structures of the Most Active Real Estate Funds

When negotiating with a private equity fund to provide you financing, it’s important to know what the funds internal hurdles are. This article highlights ten of the most active high yield real estate funds internal promote structure to help you with negotiating the best deal on your next real estate opportunity.

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Non-Recourse CMBS Lending is Back

Non-Recourse CMBS Lending is Back

At its 2007 peak, the CMBS market reached $230 billion in sales. While we are a long way from that crest, the CMBS market has fought its way back: Wall Street banks report selling $1.25 billion during the week of Sept. 10 alone, and we are poised for $7 billion in new bonds in October. Issuance could hit $45 billion this year, partly because many loans written in 2007 are rolling over and are refinancing with new conduits. That total could rise to $58 billion in 2013 and $75 billion in 2014. Part of the issue is that there is a shortage of bonds in the market, since so much of the 2007 stock matured this year. All of this is good news for the industry, because the simple truth is that we can’t function without CMBS. The bond market remains the principal way that developers and owners convert temporary financing (often three-year construction loans) into permanent financing. Typically, this is accomplished with conduit loans, which are converted into securities and sold to investors. In early 2012, some commercial real estate industry authorities feared that when existing commercial loans matured, they would not be able to refinance and the properties would revert to REO status for portfolio loans and special servicing for securitized debt. However, the Fed’s recent announcement of low interest rates ‘til 2015 means that returns on T-bills narrowed to as little as 150 basis points, forcing the global investment community to look for yield elsewhere. This was followed by the announcement of QE3, which releases $40 billion a month in investment money back into the economy. All of which benefits real estate securities, which offer investors relatively high yields (we’re seeing B-piece CMBS investors achieving 20 percent and higher yields) and relative safety (CMBS delinquencies—at just 8.96 percent—have hit their lowest levels since the beginning of the recession). The New Conduit At present, the securitization market is in a good place: Ninety-two percent of loans that originated in 2007 and are rolling over will be refinanced at a value upwards of $362 billion. Borrowers considering CMBS loans will find available money at attractive rates, primarily because investors have achieved a comfort level, since lenders have moderated leverage and...

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