Thirty Capital Recommends Portfolio Reallocations and Debt Optimization

<p>Thirty Capital CEO Rob Finlay says current market conditions are ideal for real estate investors to optimize debt and reallocate their portfolios.</p> <p>"Clearly, it's time to reallocate your portfolio," he says. "You can optimize debt right now very efficiently. Now, with this 1.50, even at 1.46, or 1.50 ten-year, it’s still an opportune time."</p> <p>TAPERING AND RATE HIKE SPECULATION DOMINATE HEADLINES</p> <p>The two big themes in our recent reports continued to play out in last week’s markets: Tapering and rate hikes.</p> <p>The short end of the curve moved up after Fed officials indicated they expect two rate hikes by the end of 2023. </p> <p>However, the most interesting reaction came from the ten-year, which dropped 13 basis points and flattened by 23 basis points by the end of the week.</p> <p>Thirty Capital Analyst Bryan Kern maintains that with increasing inflation, the economy can expect to see some reversal of quantitative easing by the end of 2021.</p> <p>SHORT-TERM OR LONG-TERM FOR BORROWERS?</p> <p>Thirty Capital CEO Rob Finlay says the question facing commercial real estate investors is should they borrow short-term or long term?</p> <p>Analyst Jeff Lee predicts that we’re in the current rate range for the short-term.</p> <p>He says: "Come Q4 or maybe in Q3, we are going to see some spikes, and people need to be aware of that."</p> <p>Rob observes that it’s a very interesting time for the short-term rates market, and that borrowers and lenders should use the months ahead to educate themselves on replacement and fallback rates so that they understand what will happen to their loans and the true cost of capital on their deals.</p> <p>SOFR RATES INCREASE</p> <p>Analyst Jay Saunders notes that the Fed raised the rate on the reverse repo facility. "Pretty much lock-step we’ve seen overnight SOFR pick pup to about five basis points."</p> <p>Jay notes that existing legacy LIBOR contracts will convert to SOFR plus 11.4.</p> <p>Bryan adds that there’s an interesting convergence between LIBOR and SOFR c