Market Update - August 2024
HAS THE CRE MARKET HIT BOTTOM?
Commercial real estate values are down 20%+ from peak values. With a clear path to lower rates, the commercial market bottom may be here. A quick look at the key indicators:
Cap Rates Peaked? Growing since 2021, the latest CBRE survey says they may have peaked.
Multifamily Volume Surges. CBRE reports that "multifamily investment volume increased by 82% quarter-over-quarter to $38.3 billion" for Q2 fueled by institutional investment.
CRE Fundraising Drops to Five-Year Low. CBRE signals that less capital is moving in thereby lowering deal competition. Previously-raised funding remains ready for the best opportunities.
Bank Lending Standards Have Eased. The Fed's Senior Loan Officer Opinion Survey says bank lending standards have eased since 2023 (though they remain tight relative to historical averages).
Commercial Foreclosures Rising. ATTOM reports commercial foreclosures continue to rise above pre-pandemic norms. Foreclosure volume of this size was last seen in 2015.
REIT Index Reaches 52-Week High. The MSCI U.S. REIT Index, measuring publicly traded real estate investment trust performance, reached an annual high in August. Often a proxy for private assets and considered a leading indicator for private markets, the index is 20% from the all-time high from 2021.
LATEST FIDELITY FUNDING
$3,500,000 Bridge LOAN
7-Day close saves a purchase transaction
When financing fell through from a prior lender, leaving the borrower with less than seven days to secure bridge financing for a large retail space in Torrance, CA, Fidelity stepped in and closed a 10.50% interest-only loan at 25% LTV within 72 hours. The loan was backed by a high net worth borrower, a 15-year corporate-backed triple net lease, and a strong exit strategy, providing an optimal risk profile to fund quickly.
