Are you optimized as a commercial real estate borrower?

<p><strong>In-depth report</strong></p> <p>As inflation increases and the economy seems more uncertain, many commercial real estate borrowers are asking themselves if they are optimized to weather whatever lies ahead.</p> <p>Some borrowers are wondering if they should wait until their prepayment penalty gets lower to refinance, but Thirty Capital CEO Rob Finlay points out that they will lose out in the long-term.</p> <p>“I understand this short-term psyche of having a lower prepayment penalty or a defeasance cost, whatever it may be. But you're losing that in the long-term because you're replacing a shorter-term instrument,” explains Rob. “Just getting people to understand that math is so critical. This is a purely mathematical equation.“</p> <p>Rob says it’s hard to believe that rates will remain where they are.</p> <p>“Just look at the numbers . . . look at the technicals, the fundamentals, you’d be hard pressed to think that rates are going to stay here, but crazier things have happened.”</p> <p>However, Rob notes that there is always an excuse around rates. “It's either a hurricane that's causing this problem or COVID, or the debt ceiling,” he says. “But I think the natural inclination of the economy and where we're heading is going to result in higher rates.”</p> <h1>Treasury rates increasing</h1> <p>Stronger-than-anticipated retail sales boosted the Ten-year Treasury up 11 basis points to 1.6 percent.</p> <p>Term SOFR is still trading slightly higher than five basis points, while BSBY is at six, and one-month LIBOR at 8.5.</p> <p>Two-year government Treasuries have moved up 22 basis points in the last month, and increases will be frequent as tapering and interest rate increases become more likely around the end of 2022.</p> <p>Our Capital Markets Report gives a full review of what’s happening as rates increase, flattening out the short end of the curve.</p> <p>Across spreads, volume at Thirty Capital continues to be very strong and the market is aggressive. As rates increase, exit costs decrease slightly.</