As we wrap up the first quarter of 2024, uncertainties still loom large, yet opportunities abound for those equipped with knowledge and foresight. With this in mind, we’ve created our first content round-up of the year to explore key insights from Thirty Capital Financial and other key industry resources. Stay informed and empowered — keep reading!
1. Sell Vs. Refi: How Do I Handle a Loan Maturing in 2024?
As loans approach maturity in 2024, the decision to sell or refinance becomes increasingly pertinent. This article explores the predicament faced by commercial real estate (CRE) borrowers with loans maturing in 2024 amidst market volatility, higher interest rates, and lower property valuations. It discusses the options of selling versus refinancing, highlighting that while some borrowers may opt to sell to minimize losses, others may seek refinancing, though challenged by doubled interest rates. The decision between selling and refinancing hinges on factors like property valuation and the cost of capital, with careful calculations necessary for informed choices.
2. Understanding Forward Rates: Mastering Forecasting and Identifying the Optimal Time to Transact
Gain insights into forecasting methodologies and learn to discern the optimal moments for transactional activities. In this video, Shawn Murphy from Thirty Capital Financial shares guidance around forecasting methodologies and transactional timing. Additional topics include the challenges posed by fluctuations in forward rates for commercial real estate investors, strategies to mitigate associated risks, tools for improving forward rate forecasts’ precision, and ways to leverage forward rate analysis to identify optimal timing for property transactions.
3. Interest Rate Volatility: Myths vs Facts
This infographic addresses common misconceptions surrounding interest rate volatility within CRE and combats them with factual insights. It emphasizes that while interest rate fluctuations are crucial for CRE, several myths exist regarding their effects. The debunked myths include the direct control of interest rates by the Federal Reserve, the inevitable decrease in property values with rising rates, the assumption that lower rates always lead to increased investment returns, the belief that rising rates will hurt borrowers with floating-rate loans, and the notion that interest rate drops should dictate portfolio moves. The video provides factual insights and emphasizes the importance of leveraging advanced tools like integrated forward interest rate curve projections to navigate interest rate volatility effectively.
4. Federal Reserve Still Sees 3 Rate Cuts In 2024 But Holds Rates Steady For Now
This blog from BISNOW reports on the recent decision by the Federal Open Market Committee (FOMC) to maintain interest rates, citing the need for greater confidence in inflation reaching 2%. While some FOMC members advocate for three rate cuts in 2024, others suggest two cuts. Federal Reserve Chair Jerome Powell suggests that interest rates may have reached their peak for the current tightening cycle but remains cautious due to economic uncertainties. The blog highlights differing opinions within the commercial real estate industry regarding the necessity and timing of rate cuts, with some expressing skepticism while others anticipate positive effects on the market. Despite the lack of rate cuts, the stock market responds positively to the prospect of future cuts.
5. Commercial Real Estate Faces New Financing Landscape
This RSM blog highlights the impact of monetary policy and yields on CRE borrowing costs and valuations, emphasizing the significance of real estate fundamentals, location, and asset class for investors. It discusses the challenges posed by increasing commercial debt maturities and rising interest rates, particularly for lower-performing assets. Additionally, it addresses the expansion of the private debt market and its role in mitigating equity downside risk along with delinquencies in the commercial office sector. Overall, the article underscores the importance of adapting to the changing financing landscape and identifies promising areas for investment amid market uncertainties.
Stay Informed with Thirty Capital Financial
Through insightful content from Thirty Capital Financial and industry-leading publications, we’ve uncovered valuable insights to help inform your decisions and strategies in 2024 and beyond. Stay tuned for more resources from Thirty Capital Financial!
