Commercial Real Estate Market Update | December 2022
Brian Gramlich- TDC Founder and CEO
December 1st, 2022 · 4 min read
Terrydale Capital is actively providing capital solutions to our clients. We are constantly in discussion with our capital market resources and identifying new resources that have become more active in this new environment.
A quick snapshot of what we are seeing:
Private Money: Rate Range of 9.75%-14%
With market volatility increasing and the holiday season here, Private Money lenders are busier than ever as they offer the best loan execution for debt transactions. With most investors looking to finalize EOY finances as we head into 2023, PM lenders enable a timely close despite higher market rates.
Debt Funds & Bridge Lenders: Rate Range of 7.50% – 10%
Rising in popularity due to their simplicity, debt funds are an excellent option for investors looking to avoid hurdles associated with traditional banking. Typically these structures are higher on interest rates but have the advantage to push leverage.
A great way of using these financial instruments would be in properties that have potential value-added features like buildings or land; this way debt financing can supplement what’s available from other sources while providing capital investment.
CMBS: Rate Range of 6%-7.50%
CMBS has seen some challenges lately due to market volatility. We expect their loan origination volume to remain somber until rates flatten out.
Commercial Banks: Rate Range of 5.75%-8%
Most traditional banks are altering their lending guidelines in real time as they adjust to the volatile market. Overall Transaction activity has remained steady with a majority of projects focused on development, short-term refinance, and/or rehab.
Credit Unions: Rate Range of 5.50% – 8.00%
Credit Unions typically offer lower rates but are far more aggressive when it comes to leverage. However, they do full global underwriting so expect a longer closing timeline in today’s market.
Fannie & Freddie: Rate Range of 5.50% – 7.50%
With the recent hike in rates, Fannie & Freddie transactions have seen a large slowdown in activity. As the market adjusts, we anticipate many clients moving back to agency options in the next quarter.
FHA: Rate Range of 5.50% -6.50%
When it comes to commercial real estate, FHA interest rates are generally pretty stable. This is good news for borrowers, as it means that they can lock in a low rate and not have to worry about the rate fluctuating too much over the life of the loan.
Life Company: Rate Range of 5.50% and Up
Actively lending on all asset classes. Call us to learn more.
Investors have many ways to structure a deal in today’s market. Mezz and Equity structures allow our clients to seek larger opportunities with options to position their transaction with as little as 5% down for qualified experienced investors.
*Rates are estimates and based on the assumption of Max LTV. Lower LTV options would allow for lower rate options in the market
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