for Commercial Real Estate Professionals
Is Recession on the Horizon?
After
6 years of uninterrupted growth, the outlook for the U.S. economy has
darkened considerably in the past several months. While many economists
cannot say whether a recession is inevitable, forecasters say the latest
economic figures do not look promising. Rising foreclosures and falling
home prices have put a damper on consumers, many of whom had funded a
large portion of their spending in recent years with gains from the value
of their homes. Coupled with the recent resurgence in energy prices (oil
is now priced at over a $100 a barrel), many consumers are feeling squeezed;
any resulting slowdown in spending could also present the economy with
additional resistance.
New home sales in November dropped to their lowest level in more than
12 years. Furthermore, monthly U.S. manufacturing activity showed a surprise
slowdown to its’ lowest level in 5 years. One positive note is that
there has been an increase in exports by U.S. companies, due in large
part to the weakness in the dollar. This in turn has provided an important
buffer to the economic damage that has resulted in the turmoil to the
housing and lending markets. One institutional portfolio lender noted
that despite the banks’ allocating fewer dollars for lending, his
institution will still be putting out in excess of $11 billion of commercial
construction, rehab, and permanent debt in 2008. Developers and owners
of real estate continue to have the opportunity to take advantage of an
abundance of available capital for their projects. We will keep you posted…
Penstar recently received a loan application for the acquisition of a value-added office complex located in Southern California. The 2-building property consists of 87,000 square feet of net rentable space and is currently 37% occupied. The borrower has extensive experience owning, operating, and managing office buildings. His business plan includes the leasing up of existing vacant space to several tenants he has in hand. Penstar provided him an 80% loan-to-cost loan at Libor +185, interest only, and with a 3-year term. To discuss, please contact Gerald Price at (818) 883-9629; Price@PenstarAdvisors.com or Rob Stewart at (818) 883-9631; RStewart@PenstarAdvisors.com.
We at Penstar understand the challenges of the commercial real estate business. The best antidote for those challenging transactions is to take a moment to have a hearty laugh. Helpful humor is our way of infusing laughter into your work week. The anecdotes may not all be real estate themed but we hope you will enjoy them just the same.
|
The Electric Chair
A chemist, a biologist, and an electrical engineer were seated
on death row waiting to go in the electric chair. The chemist
was the first to be brought forward. |
30
Day Libor |
10-Year
Treasury |
Prime |
4.32% |
3.88% |
7.25% |
