Rittenhouse Capital Advisors is a commercial real estate finance advisor with over 60 years of combined banking experience. Currently in its fourth year of operation, Rittenhouse Capital has increased its loan production volume by a minimum of 30 percent year over year by delivering creative commercial financing solutions for their real estate investor clients.
Rittenhouse Capital Advisors CEO George Johnson Provides Insights on Interest Rates and Other Factors Currently Impacting the Commercial Real Estate Finance Market
(PHILADELPHIA, Pa.) -- NEWS: Rittenhouse Capital Advisors (RCA) is a commercial real estate finance advisor with over 60 years of combined banking experience. Currently in its fourth year of operation, Rittenhouse Capital has increased its loan production volume by a minimum of 30 percent year over year by delivering creative commercial financing solutions for their real estate investor clients.
Rittenhouse Capital CEO George Johnson believes that market conditions may be about to change and that now is the best time to take advantage of historically low interest rates.
"We are late in the game here," Johnson says. "Interest rates are still very favorable to borrowers, but we don't know how much longer that will last. The Fed is unwinding their quantitative easing, which will most definitely create upward pressure on treasury rates given the shift in that supply-demand fundamental. GDP growth was a very healthy 3.3 percent in the 3rd quarter, the fastest rate in 3 years, so inflationary pressure will start to build there as well.
"The new Tax Reform package will likely bring some economic stimulus with further inflationary pressure, so there is a lot of factors in play, all pointing to higher interest rates in the near term. When that happens, lenders may take a more conservative approach to underwriting, making it more difficult to obtain the level of loan proceeds real estate investors are looking for."
Many commercial and multifamily property owners would like to capitalize on today's low interest rates, but they have existing loans that do not mature for a while, and they do not want to pay a significant pre-payment penalty to get out of these loans.
"A lot of commercial borrowers are not aware of some of the financing options that are available out there," Johnson continues. "For example, we have a great balance sheet product where a borrower can lock in their interest rate today for a period of up to 12 months while they burn-off any remaining prepayment penalty. This approach saves our clients a substantial amount of money as they avoid paying their prepayment penalty while also taking interest rate risk off the table."
E-commerce Driving a Shift in Demand toward Multi-Unit Industrial Properties:
Another factor that is currently impacting the commercial lending market is E-commerce. Companies like Amazon and Wayfair are driving demand for warehousing space. And with thousands of other companies getting in on the Ecommerce craze, multi-unit industrial properties are at a premium.
"Beginning shortly after the 'great recession,' multi-family properties (e.g., apartment buildings) were very popular with buyers and the lending community, but this segment has peaked or is approaching its peak in most major markets. Supply has caught up to demand and lenders are becoming a bit more cautious.
"It is a far different story with multi-unit industrial properties. More and more online retailers need warehouse space to store their products, and demand is far outpacing supply in this sector. Lenders love these properties because they are usually at full occupancy, rents are continually going up, and cashflow is strong. For this reason, there are plenty of very competitive financing options for this asset type."
Healthcare Real Estate in Demand with Rapidly Aging Population:
In 1950, the population aged 65 and older represented 8.1 percent (or 13 million) out of the total U.S. population of 158 million. That percentage is projected to reach 13 percent (or 46 million) out of 355 million by 2030. This shift will place great demands on the nation's health-care system and spur considerable growth in the real estate segment of the healthcare industry.
This trend in the healthcare industry is already beginning to pick up steam now with the larger hospital systems building out or leasing real estate facilities focused on delivering specialized needs such as surgery centers, urgent care, and orthopedics, just to name a few.
Similar to the industrial-distribution space, the supply-demand fundamentals have swung heavily on the demand side in healthcare and the numbers would seem to indicate a good amount of runway in the current direction. As such, expect the lending community to compete aggressively to provide funding on healthcare projects as described above and also including senior living, assisted living, specialty care (nursing homes) and memory care, going forward.
Recent Rittenhouse Capital Transactions:
Rittenhouse has helped commercial property owners with purchases and refinances across a wide range of sectors. Here is a sampling of their recent transactions:
* Apartment Building Refinance: RCA arranged a $9,100,000 refinance for a 150-unit apartment building in Philadelphia. RCA delivered the lowest fixed rate in the market along with a non-recourse structure and capped transaction costs.
* Office Building Acquisition: RCA arranged a $54,250,000 acquisition loan for a 356,000 square-foot class "A" office building known as the Great Valley Commerce Center. Located in Malvern, Pa. this building is fully leased to credit tenants. The debt assignment for this property was highly sought-after and competitive. RCA was awarded the assignment by delivering maximum leverage and a strong long-term fixed rate.
* Single Tenant, Net Leased Retail Acquisition: RCA arranged a $4,000,000 acquisition loan for a commercial parcel that is being leased long-term by Royal Farms, a fresh food and gas station chain based in the Northeast. RCA delivered the most competitive rate amongst three other options the client was considering and the loan was closed in only 25 days in accordance with the borrowers agreement of sale.
* Mixed-Use Building Acquisition: RCA arranged a $3,000,000 acquisition loan for a mixed-use (apartment/commercial) building. The property has 9 apartments and 1 commercial unit (a 7-Eleven store). RCA delivered maximum leverage, 3 years of interest only, capped transaction costs and a non-recourse structure for their client.
"We have the expertise and lender relationships to deliver favorable financing for the full range of commercial real estate assets anywhere in the country."
For more information, go to http://www.rittenhousecapital.com/
About Rittenhouse Capital Advisors:
Rittenhouse Capital Advisors (RCA) is a comprehensive debt, equity, and advisory solutions provider specializing in placing debt and equity (either for acquisitions or refinances) for Rittenhouse Realty's clients and other commercial borrowers. RCA understands the complexities of the commercial real estate market, and that no two assets are exactly alike. As such, they take the time to thoroughly understand their clients' needs and goals, so they can negotiate and arrange the financing structure that works best for them. Leveraging its extensive network of lender relationships developed over the teams combined 60 years in the banking industry, RCA is able to speak "banker to banker" with the ultimate funding source, allowing them to deliver the most competitive terms in an efficient and professional manner.
George Johnson - CEO
Rittenhouse Capital Advisors
107 S. 2nd Street 4th Floor
Philadelphia, PA 19106
Related link: http://www.rittenhousecapital.com/
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