Robert Hernandez provides expert analysis regarding the impact of rate hikes on CRE funding

TAMPA, FLORIDA (February 6, 2023) - Robert Hernandez, senior vice president/managing director of Northmarq's Tampa debt/equity team, was recently interviewed by ConnectCRE for a story titled, "Ongoing Fed Rate Hikes Cause Little CRE Funding Change." The article notes that, to one's surprise, the Federal Reserve has continued its attempts to slow down inflation via an increase of the Effective Federal Funds Rate (EFFR) by a quarter point to a 4.50 - 4.75 percent range. The increase was less than five previous consecutive rate increases, and Hernandez noted that it will likely have little impact on securing financing for commercial real estate transactions.

“It’s already difficult to secure financing,” observed Hernandez. “I don’t think this increase will have much more of an impact. Platforms providing debt and equity have already pulled back.” He added that short-term floating-rate debt will be more impacted. “The long-term bond markets have already priced it in, so I don’t see the cost of longer-term, fixed-rate debt increasing,” he said.

Hernandez noted that the office sector will be the most challenged by the ongoing EFFR increases. "Office deals coming up for refinancing will most likely not be as well-occupied, and there may be issues with their current loan amounts. This could require more equity to resolve."

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