Author Archive

Federal Regulators Warn US Bankers about their CRE Lending and Relaxed Underwriting

Most Bankers are bullish and like what they see in CRE lending Prospects

US Bankers appear to have selective amnesia as it relates to their ballooning CRE loan portfolios. Recently the FDIC issued a “warning” to the CRE lending community “prepare to hit the brakes and slow down their commercial real estate lending originations should conditions be warranted”.

In the third quarter of 2015, US Banks had steadily increased total CRE loans outstanding to $1.8 Trillion, exceeding the previous lending peak at the end of the second quarter of 2007 by over $170 Billion.

DÉJÀ VU?? – Mortgage Bonds 2016


Are they making the same “dumb” mistakes as they did in 2007-2008”?
After the debacle of 2007-2008, you would have thought Wall Street learned their lesson?


When it comes to GREED, they really did not learn their lesson?

The appetite for risky mortgages is back and forgetting what happened almost 10 years ago.

What is a Cap Rate and How is it Utilized?

Capitalization Rate

Capitalization rate is the rate of return on a real estate investment property based on the income the property is expected to generate. The capitalization rate is used to estimate the investor’s potential return on their investment without debt.

The capitalization rate of an investment may be calculated by dividing the investment’s net operating income (NOI) by the current market value of the property, where NOI is the annual return on the property less all operating costs. The formula for calculating the capitalization rate can be expressed in the following way:
Net Operating Income / Current Market Value = Capitalization Rate

The capitalization rate is expressed as a percentage and is also often known as the “cap rate.”

Q1 Retail Cap Rate Trends

There has been a huge increase in the mean retail cap rate since the last quarter of 2015, with a jump in 60 basis points since then. This is only the start of the rebuilding that has been occurring in the sector since the halfway point in 2014. View the complete details at Joseph Passerino’s Blog.