The Wall Street Journal recently spoke with David Brickman, Chief Executive Officer at NewPoint Real Estate Capital, about the relationship between interest rates, rents and building values:
" If interest rates rise faster than rents, building values are likely to fall and owners may come under pressure when their mortgage matures, according to David Brickman, CEO of real-estate finance company NewPoint Real Estate Capital and former head of housing-finance company Freddie Mac.
Investors have been routinely buying apartment buildings at capitalization rates as low as 3.5%, he said.
But mortgage rates on some of these deals have now risen above 4.5% as the Federal Reserve tightens monetary policy to fight inflation. While he doesn’t expect a wave of defaults, Mr. Brickman said some lenders to apartment owners might come under stress.
'There’s no question you’re going to have rent growth; the question is whether it will outpace interest rates,' he said. "
Get the full story here:
"Rising Interest Rates Concern Apartment-Building Owners, Renters"
– May 24, 2022