CRE Finance Council is a trade association that is...

  • Dedicated exclusively to the nearly $6 trillion commercial real estate finance industry
  • Committed to promoting strong & liquid debt markets across platforms
  • The meeting place for industry professionals
  • The platform for establishing best practices, industry standards & federal policy
  • Comprised of approximately 400 companies and 19,000 individual members
Events
More
September 18
New York

CREFC News

News Archive

News

Powell and Yellen Hearing Recaps 

July 16, 2024

Last week, Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee (HFSC) and the Senate Banking Committee (SBC) to deliver the Semiannual Monetary Policy Report. Treasury Secretary Janet Yellen separately testified before the HFSC.

Why it matters: Monetary policy and the Basel Capital proposal (covered above) were key topics in the Powell hearings while Yellen’s discussion focused on a variety of policy issues, including beneficial ownership reporting.

CRE Mentions: Commercial real estate was not a key focus of the hearings, but the issue came up several times.

Sen. Tina Smith (D-MN) and Rep. Brittney Pettersen (D-CO) touched on the risks posed by commercial real estate with Powell, focusing specifically on the effect it could have on smaller banks. Powell emphasized the issue does not appear to be systemic and that examiners and banks are working through the issues:

“We know from the stress tests and from our own work that the large banks, they're going to be okay, here. Some of the regional banks and smaller banks have what you would expect, which is high concentrations in their local community in real estate. We are aware of those [and] the banks are aware of it.” -Fed Chair Powell

Chinese Land Investments. Both Republicans and Democrats including Reps. Lucas (R-OK), Zach Nunn (R-IA), and Ralph Norman (R-SC) expressed concern that China continues to buy up land in the vicinity of U.S. military bases.

  • However, Rep. David Scott (D-GA) and other Members praised the Biden administration for adding 50 new facilities (see story below) to the list where surrounding property transactions may be reviewed by the Committee on Foreign Investment in the U.S. (CFIUS).
  • Secretary Yellen stated that Treasury is working very closely with the U.S. Department of Defense to add those 50 new facilities and the DoD just issued rulemaking after undertaking a comprehensive assessment of military installations across the country.

Beneficial Ownership. Members on both sides of the aisle, including Chairman Patrick McHenry, Rep. Norman (R-SC), Rep. Nydia Velazquez (D-NY), Rep. Joyce Beatty (D-OH), and Rep. Nunn (R-IA) expressed their concern that small businesses across the United States are unaware of the new beneficial ownership requirement.

  • Republicans took it a step further to request that FinCEN extend the deadline for small businesses to come into compliance with the beneficial ownership rule.
  • Yellen said the Biden administration is conducting extensive outreach and education to ensure small businesses are aware they need to come into compliance with the new rule. Secretary Yellen added that Treasury has been able to reach 2.7 of 3.1 million small businesses.
Please contact David McCarthy (dmccarthy@crefc.org) with any questions.
 

Contact

David McCarthy
Managing Director, Chief Lobbyist, 
Head of Legislative Affairs
202.448.0855
dmccarthy@crefc.org
Dollar bill with a microphone in front of George Washington
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
Powell and Yellen Hearing Recaps
July 16, 2024
Last week, Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee (HFSC) and the Senate Banking Committee (SBC).

News

Capital Markets Update Week of 7/16

July 16, 2024

Private-Label CMBS and CRE CLOs

One CMBS transaction priced last week:

  • CONE 2024-DFW1, a $687.1 million SASB backed by a floating-rate, five-year loan (at full extension) for CyrusOne to refinance a 644,000 sf data center in the Dallas-Fort Worth area

According to Commercial Mortgage Alert, six additional offerings totaling ~$5 billion are currently in various stages of marketing.

Year-to-date private-label CMBS and CRE CLO issuance totaled $50.2 billion, well ahead of the $19.3 billion for the same period last year.

Spreads Mixed

  • Conduit AAA and A-S spreads were unchanged at +100 and +140. YTD, AAA and A-S spreads are tighter by 16 bps and 25 bps, respectively.
  • Conduit AA spreads and A spreads were wider by 10 bps at +150 and +220. YTD AA and A spreads are tighter by 75 bps and 155 bps, respectively. ­
  • Conduit BBB- spreads were unchanged at +575. YTD, BBB- spreads have tightened by 325 bps.
  • SASB AAA spreads were unchanged at +150 to +155, depending on property type. They have narrowed from +160 to +188 at the start of the year.
  • CRE CLO AAA spreads were wider by 10 bps at +170 / +175 (Static / Managed). BBB- spreads tighter by 65 bps and 70 bps at +575 / +575 (Static / Managed).

Agency CMBS

  • Agency issuance totaled $4.4 billion last week, consisting of $1.2 billion in Fannie DUS, $3 billion in Freddie K and Multi-PC transactions, and $179.8 million in Ginnie transactions.
  • Agency issuance for the year is $51.9 billion, 14% lower than the $60.5 billion for the same period last year.

The Economy, the Fed, and Rates…

Economic Data

  • The June Consumer Price Index (CPI) showed a year-over-year increase of 3%, down from 3.3% in May and below expectations of 3.1%. This was the first time inflation had hit 3% since June 2023. On a month-over-month basis, the CPI fell by 0.1%, the first decline since 2020.
  • Core CPI (excluding food and energy) rose 3.3% year-over-year and only 0.1% since May – the mildest increase since January 2021, when large swaths of the economy were still frozen by the pandemic.
  • June’s CPI report could be especially comforting to policymakers because it showed housing costs are slowing after an enormous run-up following the pandemic. Housing inflation, which reflects the cost of renting and accounts for about one-third of the CPI, has kept overall prices high. Housing costs were up 2% on a monthly basis, the smallest increase since August 2021.
  • The June Producer Price Index (PPI) rose by 0.2% from the previous month, slightly above expectations. Year-over-year PPI increased by 2.6%, lower than the previous month, while Core PPI (excluding food, energy, and trade) was unchanged.
  • The University of Michigan's Consumer Sentiment Index fell to 66 in early July, an eight-month low. This unexpected decline was attributed to ongoing high prices affecting Americans' views on their finances and the economy.

Fed Policy

  • The latest data significantly increases the likelihood of the Federal Reserve cutting interest rates as soon as September. Fed officials, including Chair Jerome Powell and San Francisco Fed President Mary Daly, have signaled openness to easing monetary policy, contingent on continued favorable inflation and labor market data.
  • Market expectations have shifted, with futures markets now pricing in a near-100% chance of a September rate cut. There is also speculation about the possibility of a larger, half-point rate cut instead of the standard quarter-point reduction.
  • Fed officials have emphasized the importance of not causing unnecessary damage to the labor market while managing inflation. Fed officials remain cautious about potential future shocks, including political uncertainties and external economic factors.

Treasury Yields

  • Treasuries rallied sharply last week, wiping out their 2024 losses, as traders fully priced in September and December rate cuts. Yields, which move inversely to prices, tend to broadly reflect investors’ expectations for short-term rates set by the Fed.
  • The policy-sensitive 2-year yield ended the week down 15 bps to 4.45%, the lowest since February 7, while the 10-year yield declined by 10 bps to 4.18%, the lowest since March 12.

You can download CREFC’s one-page MarketWatch with statistics covering the economy and the CRE debt capital markets here.

Please contact Raj Aidasani (raidasani@crefc.org) with any questions.

Contact  

Raj Aidasani
Managing Director, Research
646.884.7566

N/A
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
Capital Markets Update Week of 7/16
July 16, 2024
According to Commercial Mortgage Alert, six additional offerings totaling ~$5 billion are currently in various stages of marketing.

News

CFIUS Proposes Expanding List of Military Bases

July 16, 2024

Last week, Treasury announced a proposal to expand the Committee on Foreign Investment in the United States’ (CFIUS) scope over real estate located near sensitive government facilities.

Why it matters: Federal and state lawmakers have been increasingly concerned about foreign adversary ownership interest in real estate.

  • In 2018, Congress expanded CFIUS’s authority to review certain real estate transactions near sensitive national security sites involving foreign persons.
  • For the first time ever, CFIUS ordered divestment of real estate when it disapproved of a Chinese-owned bitcoin mining facility near an Air Force base in Wyoming.
  • This proposed rule would add over 50 military installations across 30 states to the existing list of installations around which CFIUS has jurisdiction, including over land purchases. This latest update would vastly expand the reach of CFIUS’s real estate jurisdiction while maintaining its sharp focus on national security.

The proposed rule would enhance CFIUS’s authorities through the following key changes:

  • Expand CFIUS’s jurisdiction over real estate transactions to include those within a one-mile radius around 40 additional military installations;
  • Expand CFIUS’s jurisdiction over real estate transactions to include those within a 100-mile radius around 19 additional military installations;
  • Expand CFIUS’s jurisdiction over real estate transactions between 1 mile and 100 miles around eight military installations already listed in the regulations;
  • Update the names of 14 military installations already listed in the regulations to better assist the public in identifying the relevant sites; and
  • Update the location of seven military installations already listed in the current regulations to better assist the public in identifying the relevant sites.

The bottom line: CFIUS regulations have numerous exceptions, including largely exempting mortgage lending by foreign persons from coverage.

Please contact David McCarthy (dmccarthy@crefc.org) with any questions.

Contact  

David McCarthy
Managing Director, Chief Lobbyist, 
Head of Legislative Affairs
202.448.0855
dmccarthy@crefc.org
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2024 CRE Finance Council. All rights reserved.
CFIUS Proposes Expanding List of Military Bases
July 16, 2024
Last week, Treasury announced a proposal to expand the Committee on Foreign Investment in the United States.

We are lenders, investors & servicers.​

Become a Member

CREFC offers industry participants an unparalleled ability to connect, participate, advocate and learn!
Join Now

Sign Up for eNews