For Real Estate Professionals Seeking a Market Edge
Fed Moves to Pull Cash Out of Economy
To reel in some of the exorbitant amounts of money recently pumped into the economy during the ongoing financial crisis, the Federal Reserve is now taking steps to fine-tune an effective monetary strategy. Fed Headquarters in New York stated on Monday that investors should not speculate about the timing of when the central bank will need to reverse course and start boosting interest rates, and removing other supports to fend off inflation. The upcoming operations will involve reverse repurchase agreements, which occur when the Fed sells securities from its portfolio with an agreement to buy them back at a later date. Reverse repos are one of the tools the Fed uses to drain some of the liquidity it pumped into the economy to ease financial troubles.
The operations will be ‘extremely small’ and will not affect the Fed's key interest rate, officials said. They would not state what the total dollar amount for the operations is expected to be. Fed officials also said they did not know when the first operation would be conducted or how many are scheduled. The operations will be conducted to “ensure operational readiness” at the Federal Reserve, the New York Fed said. Additionally, the Fed reported that this move does not “represent any change in the stance of monetary policy, and no inference should be drawn about the timing of any change in the stance of monetary policy in the future.”
To foster recovery, the Fed earlier this month decided to allow a key bank lending rate remain at its current record low, and pledged to hold it there for an “extended period.” Many economists predict rates will stay at significantly low levels through the rest of 2009 and early 2010.
The central bank's balance sheet has ballooned to over $2 trillion -- reflecting the special programs established to spur lending, stabilize banks, and revive the economy; a figure more than double the amount from 2007, before the onset of the financial crisis.
One of the biggest challenges for the Fed is deciding exactly when to begin boosting interest rates, and when to remove economic and financial supports. Removing the supports prematurely could derail recovery while allowing the supports to remain in place too long will risk inflation.
We will keep you posted…
$5,000,000 Non-Recourse Loan Application for a Single Tenant Retail Property
Penstar recently obtained a $5,000,000 loan application for the purchase of a single tenant retail property located in Southern California. The 40,000 square foot building is currently leased for 10 years with two 10-year options. The lender provided a fixed rate loan at a rate of 7.45% through the first 3 years and amortized over 25 years. The loan is non-recourse with the exception of standard carve-outs. To learn more, please contact Steven Hamermesh at (818) 883-9609 or Hamer@PenstarAdvisors.com.
Helpful Humor
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
“HOW SMART IS YOUR RIGHT FOOT?” 1. While sitting at your desk, lift your right foot off the floor and make clockwise circles. 2. At the same time, draw the number ‘6’ in the air with your right hand. Your foot will change direction automatically. See for yourself! |
30
Day Libor |
10-Year
Treasury |
Prime |
0.32% |
3.74% |
3.25% |
Penstar Realty Advisors can be reached at (818) 883-9600.
Our offices located at:
21700 Oxnard Street, Suite 1870, Woodland Hills, CA 91367