Finfacts XXIV – No. 441
December 6, 2024Market Rates
Recent Financings
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Advisors
Matthew Fisher
Senior Director
Martha Martinez
Assistant Vice President – Capital Markets & Loan Servicing
Rate: 10.49%
Term: 12 months
Prepayment: No prepayment
Lender Fee: 2.5%
Land Loan, secured by three parcels, part of a larger development site to break ground in Q1 2025 in Seattle, WA
Transaction Description:
George Smith Partners successfully closed a land loan secured by three parcels in the Fremont neighborhood of Seattle, WA. These were part of a larger development site that the Sponsor intends to break ground on in Q1 of 2025. The Sponsor had originally purchased the property in 2021, and the lender felt their basis in the transaction was very conservative. Both the Sponsor and lender are local and thus confident in the quality of location and value of collateral.
The Sponsor’s current loan had already matured and needed to close as quickly as possible. GSP sent the deal to a lender who issued a term sheet in 24 hours and closed/funded the loan in 9 business days. To expedite the process as much as possible, the lender made the appraisal a post-closing requirement.
Pascale’s Perspective
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“Goldilocks” Jobs Report Provides “Permission Structure” for December Rate Cut (Then What?)…Treasuries Rally
Today’s jobs report indicated the economy added 227,000 jobs in November. This came on the heels of October disruptions from storms and major strikes (September and October numbers were revised upward). Wage growth rose a little higher than expected, up 4% annually. That “warm” data was tempered by the increase in the unemployment rate up to 4.2% from 4.1% last month. The overall takeaway is a labor market that isn’t overheating and not in danger of crashing (soft landing scenario).
Fed Futures bets indicate an 85% probability of a 25 bp rate cut at the December 18 meeting (Powell will not be the Grinch that paused Christmas, see below). The 10-year Treasury rallied to 4.15% (down from 4.27 on Wednesday).
What’s Next? Fed officials are preparing markets for a pause. Fed President Hammack: “We are at or near the point where it makes sense to slow the pace of rate reductions.” Fed Gov Bowman: “I continue to see greater risks to price-stability…I would prefer that we proceed cautiously and gradually in lowering the policy rate, as inflation remains elevated.” Futures markets indicate a 75% chance of a pause at the January meeting. Stay tuned!
By David R. Pascale, Jr., Senior Vice President at George Smith Partners.
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