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Mogul Minute 11/16/2016
November 16 | 2016

Here at RealtyMogul.com, we keep our finger on the pulse of all things real estate, from finance to technology and everything in between. We make a point of sharing interesting articles and think pieces among RealtyMogul.com staff to help our team stay abreast of the market, and ahead of the curve.

So we thought, why not share some of these insights with you, our partners?

Got A Minute? Here’s some recommended reading with key points from the content:

GDP, Inflation and Interest Rates Forecast to Rise Under Trump Presidency (WSJ)

  • In the latest WSJ monthly survey, economists are bumping up their growth forecasts saying that “the economy could expand 2.2% in 2017 and 2.3% in 2018, as a fiscal stimulus kicks into gear, up from about 1.5% over the past 12 months. Inflation is seen at 2.2% next year and 2.4% in 2018. If correct, it would be the first stretch of sustained inflation above 2% since before the recession of 2007 to 2009.”
  • The source of the current optimism is anticipated tax cuts and an increase in infrastructure. However, Megan Greene, chief economist at Manulife Asset Management, cites concerns over potential trade restriction or immigration and how it “could do swift harm to the economy.”
  • Refer to the chart below to see how the forecast compares to the last four years:

Regency Centers to Acquire Equity One in $15.6B Transaction (Connect)

  • Regency Center and Equity One are merging to create one of the nation’s largest shopping center REITS. Regency Centers will be the surviving public company and the combined REIT will continue to trade on the NYSE under the ticker REG. The merger is expected to close in early 2Q 2017.

UPS to Build 250-Acre Atlanta Distribution Facility (CPE)

  • UPS will lease 250 acres of land in Fulton County for their brand new 1.5 million square foot distribution center. The center will be their largest distribution facility to date and will be developed by Majestic. The facility is expected to open in late 2017 and is expected to be capable of processing 100,000 packages per hour.

CMBS Trading Heightens with Presidential Election (Trepp)

  • CMBS trading activity ticked up during election week as roughly $700M went out for bid last week and spreads have tightened since the election results. For the past week, cash spreads moved in between one to four basis points. For the CMBX 6/7/8/9 series, AAA spreads have rallied two to four basis points, while BBB- spreads were 25 to 31 basis points tighter.
  • In the CMBS market as we are likely going to see higher interest rates, less stringent risk retention requirements (& less borrowing costs), as well as potentially more restrictions on the GSEs (Fannie & Freddie) – all of which could be pluses for CMBS.

Panic in housing market as Trump effect pushes mortgage rates to 4% (CNBC)

  • Mortgage rates have increased nearly a half of a percentage point since Trump was elected. Mortgage rates have a loose correlation to the 10-year Treasury and mortgage rates have been increasing as investors flocked to the stock market following the election news. “The run-up on stocks is backed by a belief that the Trump administration will be a boon to the economy overall and the banking sector specifically.”
  • This is bad news for potential home buyers as prices have already increased substantially over the past few years due to a lack of supply and the low interest rate environment of the past few years.

 

Tim Ednoff Headshot
Written by , Associate - Commercial Equity at RealtyMogul.com

Tim evaluates investment opportunities as well as performs due diligence and writes content for various equity and debt transactions. Outside of the office, Tim is an avid sneaker collector, a passionate health and fitness advocate, and a dedicated podcast enthusiast.

 
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