Real Estate Capital Scoreboard® – March, 2021

Chicago, Illinois, March 1, 2021 – Characterized by brutal weather for most parts of the nation, the second month of the year finished with slightly higher rates and widened mortgage spreads between short and longer-term debt.  Bond investors expect quick economic recovery and gain more comfort with the new administration’s policies on wage growth and government spending mandates.  As a result, higher yield expectations prevail, translating to treasury rates of about a quarter-point for shorter-term debt and forty basis points for long-term debt. 

Apartment financing programs represent the tightest mortgage spreads in the commercial property industry.  Low-leverage loans of 55% or less provide pricing starting in the mid-two-percent-range for five-year terms and a half-point higher for ten-year debt.  Conversely, higher-leverage debt approaching 80% LTV starts in the lower-to-mid-three-percent range.  Other commercial properties generally feature pricing beginning in the mid-three-percent level with exceptions for lower-leverage prime assets. 

All-in-all, fund availability remains high as lenders seek new loan opportunities but find few options – especially for strong-performing assets. 

The Real Estate Capital Institute’s director, John Oharenko. advises, “2021 should continue to show improved property performance, as markets recover from the pandemic.”

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