Commercial Mortgage Indexes – August

The 10-year U.S. Treasury moved moderately higher during July, finishing the month up 12 basis points from June at 2.98%. The 30-Day LIBOR did not track with the Treasury, decreasing slightly by 3 basis points to 2.07%. The Federal Reserve upgraded its assessment of the U.S. economy, but left interest rates unchanged for now. The committee is widely expected to approve two additional rate increases this year. There were many potential market moving events in July, including ongoing threats from the President to impose $505 billion in tariffs on Chinese imports and Facebook posting the largest one-day market value decrease by any company in U.S. stock market history. Despite these events, the S&P 500 closed out July with solid gains.
As the 10-yr. Treasury creeps past 3%, and the difference between the short-term and long-term yield narrows, investors are feeling pressure to secure long-term, fixed rate loans on their commercial properties.

Opportunity Zone:

As part of the 2017 federal tax reform package, Governor Sandoval nominated up to 61 census tracts in Nevada to be a part of an Opportunity Zone. Click the interactive map to see if your property is in “the Zone” for tax incentives. https://eig.org/opportunityzones

Tax Benefits of investing in Opportunity Zones:

1. A temporary deferral of inclusion in taxable income for capital gains reinvested in an Opportunity Fund (recognized on the earlier of the date on which the opportunity zone investment is disposed of or December 31, 2026).
2.  A step-up in basis for capital gains reinvested in an Opportunity Fund (basis is increased by 10% if the Fund is held for 5-yrs. and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original gain from        taxation).
3. A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years.

CommCap is the largest full-service mortgage banking company in Nevada, with offices in Reno and Las Vegas. We specialize in originating, underwriting, closing and servicing loans in excess of $1MM on all income-producing property types. We represent a wide variety of funding sources including Life Insurance Companies, Investment Banks (CMBS), Bridge Lenders, Agency lenders and Banks.

 

Agency Update

(multifamily, mobile home parks, student housing, senior housing, affordable housing)

Life Company Update

(multifamily, office, retail,self-storage,

industrial,etc.)

CMBS Update

(multifamily, office, retail, self-storage, industrial,etc.)

Fannie and Freddie Mac have a small balance program for deals $1MM- $6MM Our recourse based life companies will go as low as $1 million in proceeds compared to a minimum of $3 million for non-recourse life company lenders CMBS offers interest only depending on the leverage point
Green Rewards provides up to 5% more proceeds than conventional and you will see a cost savings in spread Non-recourse and Recourse (for less conservative loan requests) available 75% max LTV (most CMBS lenders are underwriting max 70% LTV based B-buyer demand)
Mod-Rehab Products are offered by both Fannie and Freddie Recourse is different from traditional recourse in that there is no mark-to-market language in the loan documents, hence there is no margin call. It does not go on your credit report 5, 7, 10-yr. terms available
HUD/FHA offer 35-yr. terms with 35-yr. amortization. Something to consider for people who plan to hold properties long-term 65%-75% max LTV (non-recourse and recourse) 30 yr. amortization
HUD offers construction-perm financing. Up to 85% LTC, non-recourse with rates similar to conventional. 40-yr., term/ 40-yr. am. This is for the long-term hold 3, 5, 7, 10-yr.… up to fully amortizing terms available Non-recourse
5, 7, 10, 12, 15 and fully amortizing terms available 25-yr. amortization Still the most aggressive lender for retail and office properties
30-yr. amortization Rate lock at application is available with no “material adverse change” language. There is a slight premium to the spread for the rate lock
Non-recourse