Commercial Real Estate News Wrap Up: April 12, 2016

April 12, 2016

Current Fed Chairwoman Janet Yellen joined past Fed heads Ben Bernanke, Paul Volcker and Alan Greenspan at a joint appearance about the economy last week. The consensus from all was that the economy is good. Yellen said the economy is “on a solid course, not a bubble economy.” Volker agreed saying, “I certainly don’t think we’re in a bubble economy.” Bernanke added that just because slow growth has gone on for a few years now that doesn’t mean it’s set to expire from old age. “I don’t see any reason to think a recession is any more likely in 2016 than in 2015 or 2014,” he said. The financial press hangs on every word the leader of the Fed utters looking for a way to predict the future. On the issue, Greenspan said, “the real problem is that monetary policy is very largely economic forecasting and our ability to forecast is significantly limited.”

Morningstar predicted that the ability of borrowers to pay of CMBS loans in the coming wave of maturities will “become progressively more difficult through 2017, as many loans remain overleveraged.” The company said 41% of the CMBS loans maturing this year have LTV ratios of more than 80% suggesting a payoff rate between 65% and 70%. For 2017, they project the payoff rate could drop below 60%. Of course, LTV isn’t the only factor in a loan’s ability to payoff on time. Refinancing also depends on other factors such as debt service coverage ratio, debt yield, amortization, and lease expiration risk as well as cap rates and specific market trends.

A bedroom sized inflatable technology will ride to the International Space Station kicking off a new era in the hospitality industry. Robert Bigelow, an American hotel and aerospace entrepreneur, financed the project to secure a tiny expansion of the ISS, engaging astronauts to test the tech and see if his first foray into space hospitality is viable, according to a story in Fortune. The inflatable room called the Bigelow Expandable Activity Module (BEAM) will take a ride aboard the SpaceX rocket scheduled to launch this week. When tourists are ready to go where no tourists have gone before, Bigelow plans to corner the market. The hotel boom can’t last forever on earth but space is an undiscovered country ripe for a new type of hospitality model.

8+1 (That’s 9) Things You Need To Know

  1. Bill Gates helps Sears secure a loan
  2. Get ready for a Zuckerberg reality show
  3. Multifamily’s countercyclical appeal
  4. Small banks make more than half of the loans to Main Street businesses
  5. Minimum wage set to rise in CA, NY
  6. Video: Why do you hate selling?
  7. Web connects to the world, conferences unite me with my tribe
  8. ULI Consensus Survey Indicates Slower Growth Ahead
  9. Is your CRE business growing as fast as technology?