Chicago, IL -- (ReleaseWire) -- 02/11/2008 -- Investment sales activity in 2007 finished at near record levels despite the national disruption within the debt capital markets. Many firms reported Fourth quarter numbers were down significantly from historical norms and activity levels are expected to be lower in the foreseeable future. Driven by changing debt availability and terms, significant pricing gaps among buyers and sellers are creating delays in launching of any major assets sales. This slowdown is expected to continue well into 2008 until liquidity returns to the marketplace.
Lender pull-back on loan-to-value ratios, amortization schedules and increase spreads resulted in quantifiable changes in certain valuations. Recession fears and cautious economic outlooks continue to created hesitations among most investors. Several transactions on the verge of coming to market are delayed as seller timing and forecasting remains the deciding factor. In many instances values of certain property types (particularly B and C-grade) are down by as much as 15%. For example, the table below illustrates office property debt and equity revised pricing as of early February.
According to James Postweiler, an Advisory Board Member of The Real Estate Capital Institute®, “A window of opportunity is open for investors with cash and the willingness to break from the heard. Those that follow through and close with little difficulty will emerge as preferable entities and will be selected as winning bidders even at lower-priced offers.” He adds, “Reliability - equal with price - has risen as a primary consideration in seller decisions."
The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR. Furthermore, call the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825) for hourly rate updates.