Time to Put Capital in Real Estate
The current environment--heavycompetitionin the debt markets leading to compressed spreads, as well as low yields in the Treasury market--is one borrowers should be taking full advantage of, according toNewport Beach-based Alison Co VP Shaun Moothart (pictured not taking advantage of oxygen) and principal Carl Fuller. They tell usthe low-interest rate window of opportunity might be closing: Treasuries are expected to increase up to 50 bps by year's end, and with narrowing spreads, interest rates will begin the path upward by 2014, if not sooner. (Numbers are like babies, sometimes they're fun, sometimes they make messes, and they can never stay still.) Many borrowers are alreadypursuing early refi, paying prepayment penalties to ensure the interest rate is locked at historical lows, and extending fixed terms out as long as possible.
Recently Shaun arranged $10.1M in permanent financing for a SoCal portfolio consisting of four properties totaling 212k SF: one acquisition deal in LA and three refis in Orange County. And Carl recently oversaw a $17.7M forward commitment on two distribution buildings totaling 850k SF in Riverside with four tenants and varying lease terms. A correspondent life insurance company provided the seven-month forward commitment for a term of 10 years amortized over 25 years.
