PLUM Insights

PLUM Lending and the Current US Economic Outlook

stack of papers

The US Economy was Tentative going into 2020:

  • Earnings growth going into 2020 was soft prior to the COVID-19 shock. Corporate earnings grew YoY in 2018 at 22.7% and then slowed to 1.1% growth in 2019 .
  • With the almost certain further decline in GDP as countries, cities and conference venues are locked down, even the most optimistic Wall Street analysts are projecting at least a 50% probability of recession.
  • Corporate debt at record levels combined with the escalating trade war tensions and one-off issues such as the 737 MAX grounding, were already weighing on US GDP growth.
  • JetBlue recently reported that the demand for flights has fallen more due to coronavirus than after 9/11, and the CEO of Southwest has also admitted that this has a “9/11 feel to it” when discussing the double digit decline in seat demand.

Impact to the availability of CRE financing:

  • Inevitable decline in revenue and growth, particularly in hospitality and retail centers has many lenders retreating from these asset classes.
  • Supply chain disruption, travel, steel production down 90%, auto sales down 95%.
  • CMBS and securitized lending products are trading at substantially increased risk premiums, equivalent to early stages of the 2008 great financial crisis.

We're here for you:

  • Collectively, we are facing a public health crisis and our hearts are with all of those affected by the novel coronavirus.
  • Despite the challenging environment, PLUM recognizes that its clients have loan maturities and we are prepared to fill the void in liquidity with our balance sheet loan offerings.
  • As a result of our institutional ownership and additional recent allocation of capital from insurance companies, we are actively seeking investment opportunities for their funds.
  • PLUM’s stable balance sheet offerings are not impacted by the lack of liquidity in the  capital markets, and continue to be available at attractive rates. Our capabilities allow us to offer a special book of capital by negative market trends.

For information on how your immediate financing needs may be met, contact a PLUM expert.

PLUM Lending is a full-service commercial real estate lender that provides creative structured finance solutions for a full range of property types. We specialize in the capitalization of middle-market commercial real estate properties nationwide with a focus on secondary markets. We provide borrowers with capital through our PLUM SELECT direct lending program, as well as our capital markets financing program.

Related

Actions By The Fed Do not Singularly Determine Commercial Real Estate Interest Rates

While the Fed is an important driver in the economy, it isn’t the only factor that shapes long-term interest rates for commercial real estate.  We saw interest rates move independently of the Fed’s actions in the year 2000.  At that time, the Fed had abandoned their two year fight against inflation and turned on its…

Read More >>

We all could use an extra $800,000

Santa came early for some commercial real estate owners who locked a rate in the past week.   The 10YR US Treasury yields dipped then rallied last week, declining to 4.11% before bouncing back to current levels near 4.25%.  Is this dip and then increase back to the prior week’s levels a sign of a…

Read More >>

CRE Owners Catch a Break

CRE Owners Catch a Break   This past week, commercial real estate owners caught a huge break.  The 10YR treasury yields fell almost 0.30% throughout the week, and are 0.80% lower than their high of ~5.00% in mid October. Not even Friday’s comments by Fed Chair Powell that “rate cuts are premature” stopped yields from…

Read More >>

Market Spotlight Portland, OR

  Portland, OR is a PLUM market due to its sustainability initiatives, diversified job market, and relative affordability compared to other west coast cities. The industrial market in Portland has been the city’s top-performing sector over the past three years, with asking rents up approximately 25% from pre-COVID levels. Click Here to Download Full Market…

Read More >>

Market Spotlight Pittsburgh, PA

  Pittsburgh, PA, is a PLUM SELECT 80 market due to its storied industrial history. Pittsburgh is widely known as Steel City, due to the long-standing presence and history of steel manufacturers, with US Steel still headquartered in the city. Forbes recently named it the best housing market for Baby Boomers. In addition, Pittsburgh has a long…

Read More >>

© 2019 PLUM Lending. All Rights Reserved. | Terms of ServicePrivacy | Plum, Inc. dba Plum and/or Plum Lending