Missouri commercial real estate developers might want to learn about the factors that may affect financing availability over the next year. The commercial real estate market has been strong, and understanding the factors that may impact the ability to secure financing may help developers as they plan for their projects.
When interest rates are low, borrowing activity increases. While it is expected that the Federal Reserve may increase interest rates in 2017, they are likely to stay low. According to CoStar, $395 billion in loans are set to mature in 2017. Many developers who have loans that are maturing might refinance their loans while the interest rates are still low.
President Trump is expected to loosen regulations, which may fuel an increase in lending activity. The capital lending market offers a diverse array of lenders and funding sources, encouraging competition. A new law about commercial mortgage-backed securities is going into effect. It requires lenders to hold onto 5 percent of their loans rather than selling them as bonds. The new law has made some lenders become more conservative with their underwriting practices, which may lead developers to seek funding from alternative sources.
Companies that are interested in developing commercial property or refinancing existing projects might want to consult with business and commercial law attorneys at the outset. Attorneys with relevant experience will likely be aware of potential regulatory changes that could affect the marketplace, and they could also suggest alternative sources should the market change. Legal counsel can also review term sheets to identify any potential problems.