NEW EDITION: Reno Report

Q1 of 2023 is just about in the books…THANK GOODNESS.

With so much uneasiness and uncertainty lately, everyone is on edge wondering when the next shoe will drop.

I’m feeling all of these things right alongside you.

I don’t know about you, but when fear sets in…it’s completely natural for you to want to take control. The fact of the matter is…there are a few things you can do to ride this wave and help mitigate damages. If you want to talk about options for your deal, hit reply to this email so we can connect.

This edition of the Reno Report gives the latest industry updates, rates, and underwriting tips to help you get your deals funded, so you can close your deal with confidence.

All my best,

Brandi

THE LATEST FROM THE FED

> The fight against inflation continues. The recent turmoil in banking subsided and there was enough normalcy in financial markets that the Fed was comfortable with a ninth interest rate hike.

> Besides raising interest rates, the Fed has also been selling off huge chunks of its bond portfolio. As the Fed runs off its balance sheet, the move helps drain liquidity from the financial system in an effort to slow inflation.

> Inflation has been running hot over the last couple of years, and the Fed is aggressively raising interest rates to combat it. So plan carefully for how to take advantage, for example, by being more discriminating when it comes to shopping for rates.

> Investors should not allow short-term economic cycles to undermine long-term strategies. Fundamental demographic and economic forces will support long-term demand for all types of commercial real estate, while the spike in interest rates will curtail development and supply risks into 2024 or potentially even longer.

UNDERWRITING TIPS TO HELP YOU NAVIGATE THE LENDING PROCESS?

For Bridge Debt:

> 70% Max LTV – 65% Stress Test

> Average rate IS 350 BPS over SOFR

> T3 Income/Pro Forma Expenses

> Debt Yield Over 5% is Ideal

> Interest Reserves of 6-Months

> Use current rates for your exit - may need to go higher for investor comfort

> Use Chatham's rate cap CALCULATOR

> Lenders will re-trade so model your worst-case scenario?

For Agency Debt:

> Max LTV as 80%

> Must have a 1.25X DSCR

> T3 income/pro forma expenses

> Average rate has a 5.5%-6.5% - stress test with a 20 bps buffer

> Model 3-years I/O – more is highly likely

> 30-year amortization - more is possible on a case-by-case basis?

TOP MARKETS FOR MULTIFAMILY

In 2022, multifamily investments topped just over $200 billion and were still 14.4% lower than in 2021. That being said, there are some markets performing better than others. Listed below are the top 10 multifamily markets by investment volume in 2022, according to Yardi Matrix.

WILL THE FED RIGHT-SIDE THE MARKET?

Bank of America’s Alan Todd, a commercial mortgage-backed securities strategist, was quoted earlier in March saying, “Sellers will need to acknowledge that their properties may be worth less than what they thought at the start of 2022.”?

The belief that a recession may be coming resulted in lower commercial real estate valuations and a slowdown in property transactions.?

Delinquency Rate Rises: The delinquency rate among U.S. CMBS loans rose to 3.06% in February, an increase of 0.12 percentage points from January, according to Kroll Bond Rating Agency. This is the first time the rate has risen above the 3% threshold since June after it dipped to a post-COVID low of 2.76% in September.

Delinquency for multifamily loans rose 0.47 percentage points month over month, pushing the rate to 2.33%. By comparison, the multifamily delinquency rate in October was 0.98%.

5-Year Loans Lead Deals: Given the current high interest rate environment and chaotic capital markets, 5-year, fixed-rate loans have become a very popular financing option for many borrowers.?

CHECK OUT THE LATEST AGENCY RATES

as of 3/29/2023 **Pricing will vary based on factors including, but limited to, loan size, market, asset quality, affordability, sponsorship, and borrower structure.**

FANNIE MAE SMALL BALANCE: 80% LTV 5/7/10/12 YR Term w/ Yield Maintenance PPP: 5.53% - 6.28%

FANNIE MAE CONVENTIONAL: 80% LTV 5/7/10/12 YR Term w/ Yield Maintenance PPP: 5.50% - 6.05%

FREDDIE MAC CONVENTIONAL: 80% LTV 5/7/10/12 YR Term w/Yield Maintenance PPP: 5.60% - 6.05%

FREDDIE MAC SBL: 80% LTV 5/7/10 YR Term w/Yield Maintenance PPP:

5.61% - 6.07% (depending on market)

RENO'S RECENT CLOSINGS

HEAR FROM OUR CLIENTS

“Brandi goes out of her way to make sure you're taken care of and all your questions are answered. She takes the time to make sure you understand exactly what's happening." - Justin Francis, Shakti Capital

When the stakes are high,YOU CAN COUNT ON RENO.

I know many of you might feel like you’re in a pressure cooker right now.

Higher interest rates…higher mortgage payment…increasing property taxes…insurance…the list goes on.

There are several alternatives (4 to be specific!) to help ease the burden and I’m working with multiple operators on this as we speak.?

While some things are out of my control and I can’t guarantee your deal would be a fit for one of these 4 options, I can promise you that I’ll do everything in my power to find you a solution.

If you’re feeling squeezed operationally, these solutions are at least worth exploring.

Here’s what you need to do.... Click HERE to submit the quick form. Once the form is submitted, you'll receive another email from me with the details of what info I need on your property to start this process.

**...and if you have a new investment and are seeking funding, click HERE to GET FUNDED.**