Debt Markets
- The delinquency rate for U.S. CMBS dropped 14 basis points in January down to 9.57%, and it marked the lowest level since February 2012, when it was at 9.38%, according to Trepp. The retail sector had the lowest delinquency rate for the month, 7.79%, while the multifamily delinquency rate remained the highest at 13.43%, according to the Trepp.
- In 2013, we expect life companies, balance sheet lenders and CMBS lenders will increase market share at the GSEs expense by means of higher leverage, creative pre-payment structures, shorter loan terms and more interest-only term at comparable rates.
- With an increased amount of liquidity into commercial real estate funding arena coupled with the variety of debt options at low interest rates, we expect investment volume to pick up significantly in 2013, possibly as much as 20%.
Equity Markets
- Investor appetite for private real estate is growing, per research firm Preqin. Preqin revealed that a majority of private real estate fund investors expect to make new commitments and commit more capital to private real estate funds in 2013 than they did in 2012. Investors are also branching out beyond the core real estate investments and seeking higher return opportunities found in core-plus, nongateway markets, value-added and opportunistic strategies.
- The United States is the preferred real estate investment market, according to the annual survey of the Association of Foreign Investors in Real Estate’s (AFIRE). Non-U.S. investors are optimistic about the U.S. economic recovery and there are limited alternatives for stable, secure investments. The top cities for real estate investment include New York, London, San Francisco, Washington and Houston, and for the fifth year in a row, the multifamily sector remained as the investment target of choice.
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