Category Archives: Industry News

New Fed Chairman Raises Benchmark Rate .25% Today

The end of the first quarter of 2018 is quickly approaching. Over the last few months we have seen interest rates continue to climb and are projected to go up through the second quarter based on reports from top economic forecasters.

During this week’s FOMC meeting, the first under new Chairman Jerome Powell, the Fed increased the benchmark index by 25 basis points and signaled the necessity to steepen the path of future increases.

We predict the Fed to hike the Fed Funds Rate two to three more times in 2018. We also see yield curves flattening further in 2018. Both of these are consistent with market indicators. With a perfect storm of factors (heavy T-bill issuance, the U.S. tax overhaul, and the Fed’s policy tightening), we anticipate that short-term rates will eclipse 2.25% by year-end and 1-month LIBOR will likely approach 2.5% by this time next year based upon the Forward Curve.

HOW Q10 KDH CAN HELP: Q10 KDH clients are locking rates on longer fixed rate products for immediate funding and forward commitments up to 12 months. Please contact our team to review current or future investments.

Texas Market Overview – Q1 January – March 2017

We are pleased to provide you with the Q10 KDH Texas Market Overview for the first quarter of 2017.  Our attached report covers the four major Texas metro areas including Houston, Austin, Dallas, and San Antonio. In this report, you will find a detailed look into the first quarter for the Texas market along with the analytical research to summarize the information.  If you have any questions about our Texas Market Overview, please feel free to contact our Research Director, Graham Hildebrand.

Q1 Texas Market Overview

Takeaways from MBA CREF17

Q10 KDH sent five producers to the MBA CREF17 Conference that took place in San Diego, California Feb. 19 – 22.

At the beginning of each year, MBA CREF brings together over 3,500 commercial and multifamily real estate finance professionals across the nation for three days of networking, deal-making and building new relationships. CREF is where our industry leaders go to learn from one another and discuss market trends, new developments, and strategies to continue to succeed in today’s commercial real estate enterprise.

Please view our takeaways from the MBA CREF17 convention.

Houston Wins with the Super Bowl

It has been 13 years since Houston hosted the Super Bowl and a lot has changed since then.  Based on this entirely (non-) scientific study of Houston market conditions, Q10 KDH prepared a chart to show you just how much we’ve grown between 2004 and 2017. Regardless of what happens on the field this Sunday, Houston wins by being able to share our slice of heaven with the estimated 138,000 visitors coming into town for the big event.  Enjoy the game everyone, and Houston will enjoy the nearly $200 million in direct visitor spending that is set to occur over this week.

$4.3 Billion in Loan Production for Q10 Capital in 2016

Congratulations to our Q10 Capital partners across the US for completing $4.3 billion in new loan origination in 2016.

“We are pleased to announce another solid year of loan production for our investor partners. Uncertainty in the capital markets certainly created challenges during the year, but we are very pleased that once again, over half our loan production was for our life insurance company correspondent lenders. Our $4 billion plus in loan production was spread among 107 different lenders”, said Bob Stout, Q10 Capital CEO

 

Texas Market Overview 4th Quarter

We are pleased to provide you with the Q10 KDH Texas Market Overview for 2016.  Our attached report covers the four major Texas metro areas including Houston, Austin, Dallas, and San Antonio. In this report, you will find a detailed look into the fourth quarter for the Texas market along with the analytical research to summarize the information.  If you have any questions about our Texas Market Overview, please feel free to contact me or our Research Director, Graham Hildebrand.  

Ray Driver, Principal

YE 2016 Texas Market Update Report Suite

A Fed Christmas Present?

Now that the Fed has concluded their December meeting and rates have increased 25 basis points, how many more rate increases are coming in 2017 and what will the longer term impact be for commercial real estate investment?

As the shock (and awe) of President-elect Trump’s victory has begun to fade, investors have begun a careful examination of how future monetary and fiscal policy decisions may impact commercial real estate in 2017 and beyond.  Chief among these is the Federal Reserve’s recent December meeting where a 25 bps rate hike was announced as well as any additional potential rate increases decided during the Fed’s additional scheduled meetings in 2017.

Now that the Federal Reserve has lifted interest rates for just the 2nd time in a decade, it’s important to examine just how different the economic conditions within the United States are during this hike.  Unemployment has dipped to 4.6 percent and earnings growth has increased to 2.4%. Additionally, even with the recent 10 Year Treasury movement, it is important to remember that today’s 2.5% rate is still far below the long-term average over the past decade of 4.06%.

Chairwoman Yellen’s biggest challenge going forward in 2017 is to gauge President-elect Trump’s economic policy impact, as the plan calls for $1 trillion in infrastructure spending, tax cuts and deregulation. These plans could trigger a faster pace of growth next year and force the Fed to catch up with economic developments. Inflation expectations continue to rise within recent weeks in the United States, as both the 10-year TIPS rate and WTI pricing have shown steep gains over the past 30 to 60 days.
President-elect Trump’s proposed changes regarding fiscal, trade, monetary and regulatory policies; as well as the Fed’s reaction to them hold the potential of significant impact for commercial real estate investors. The most recent FOMC “dot plot” showed a continued “dovish” approach with one to two additional hikes projected in 2017; however, following December’s announcement, the median projection is now three different quarter-point hikes in 2017. Overall, it is anticipated that Chairwoman Yellen will remain cautious in any reactions to President-elect Trump’s policies once he officially occupies the office of President.  Investors, lenders, and owners must also be cautious during 2017 as they able to make informed decisions on rate changes and fiscal policy, but in order proceed with full confidence, they must weigh additional factors including trade policy implications and upcoming Dodd-Frank reforms. Commercial real estate remains an attractive vehicle during these times as a strengthened economic outlook combined with a high sector performance will increase long-term investor demand. However, the combination of the increasing 10-year Treasury average, potential corporate tax reforms, and a continued rising cost of capital is poised to make the short-term approach of investors and owners one of caution.  It is anticipated that lenders will continue to focus on LTV ratios, while assets across all property types will continue to see a tightening of the yield spread during the upcoming year.
As 2017 is shaping up to be a year of uneasiness over our new and untested government, investors and owners with future financing requirements must focus on stability and steadiness at this time. At Q10 KDH, our seasoned team of professionals can help our clients navigate these uncertain times through our stable network of strong long-term lender relationships as well as steady business practices and in-depth market knowledge.  We can provide exemplary client-focused service locally and nationally with an emphasis on debt and equity placement for all commercial real estate property types and all CRE needs.