Commercial Loans & Mortgage News - June 18, 2002
Are We There Yet?
With half the year already behind us, it's becoming increasingly clear that the Fed is unlikely to increase rates in the foreseeable future. Consumer spending, business investment and inventory growth are all factors that weigh heavily in measuring the pace of economic recovery - all of which are lagging slightly and give the Fed reason to sit still for fear of impeding a recovery. Real estate, however, seems to be working through the cycle reasonably well, and perhaps largely as a result of lender-imposed discipline. Below is a quick report of what we're seeing "From the Street".
Interest Rates: Fixed and variable rates are extremely low and not likely to change anytime soon. We should see rates remain low throughout the next six months.
Supply & Demand: Demand is extremely high, while supply remains extremely limited. It's a good time to be a seller, but it's tough to find another property to trade into.
Hotels: Hotels seem to have seen the worst of the corrective cycle and now we're seeing lenders that were out as recently as two months ago coming back into the market.
Office: Proceed with caution. Depending on which market you're considering, there's still a considerable amount of space that is technically "occupied" but not being utilized - so do your research to determine how much available space exists within each sub-market. Rental rates seem to have returned to a more stabilized pre-dot.com level, but vacancy remains high. We believe its premature to predict the bottom just yet.
Industrial: Stable.
Retail: Newer vintage and well-positioned older centers remain extremely strong.
Apartments: Rents softened, but appear to be stabilizing. Overall - always a favorite.
Insurance: In an Op Ed in the June 5 Washington Post, AIG Chairman Hank Greenberg advocated a broad-based federal terrorism insurance backstop to cover losses resulting from all forms of terrorism. Greenberg argued that the insurance industry is not capable of insuring against the risk of war or nuclear, chemical and biological attacks on any mass basis, and that the private sector simply does not have the financial capacity to cope with such enormous losses. This can be done only by government, he stated, and without federal intervention, these losses must, under the workers' comp laws of every state, be borne by employers and insurers. The U.S. Senate began debate today on back-stop legislation. Disagreements between Republicans and Democrats over punitive damage awards have held up passage of a bill.
Once again, Steelhead Capital is happy to assist you with your financing needs, and we hope this week's overview is helpful in keeping you informed.
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Chief Executive Officer Peter Slaugh founded Steelhead in 1999. In the relatively short period since its inception, Slaugh has built Steelhead into a leading resource for debt and equity placement nationwide. Slaugh is primarily engaged in growing the company and its lender relationships, as well as working on financings.
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With an extensive lender network, Steelhead Capital has built its reputation on structuring commercial loans requiring both debt and equity placement. Fluctuations in the capital markets present significant challenges for investors and we are pleased to provide financing as well as guide and advise clients through the process. Whether you are looking for apartment financing, commercial financing, mezzanine financing, or creative "out of the box" real estate loan alternatives, we can help.
For apartment loans below $2 million, we have a small apartment loan program with extremely competitive rates. For apartment loans and commercial mortgage loans above $2 million, we provide direct access to the country's most aggressive lenders. Make Steelhead Capital a part of your commercial real estate financing success. We look forward to hearing from you soon.
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