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Fed Maintains Target Range for Rates; Projects Three Cuts This Year

March 21, 2024

By Matthew Swerdlow, Ariel Property Advisors

Fed Maintains Target Range for Rates; Projects Three Cuts This Year

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The Federal Reserve remained in a holding pattern as policymakers left rates unchanged for the fifth consecutive meeting. At the March 19-20 meeting, committee members voted unanimously to maintain the target range for the federal funds rate between 5.25% to 5.50% and projected three rate cuts this year. Rates will remain the same until the Fed has greater confidence inflation is heading to 2%.The Personal Consumption Expenditures Price Index, (excluding food and energy) rose by 2.8% over the 12 months ending in February.


“In our SEP (Summary of Economic Projections), FOMC participants wrote down their individual assessments of an appropriate path for the federal funds rate based on what each participant judges to be the most likely scenario going forward,” Fed Chair Jerome Powell said in his opening statement. “If the economy evolves as projected, the median participant projects that the appropriate level of the federal funds rate will be 4.6 percent at the end of this year, 3.9 percent at the end of 2025, and 3.1 percent at the end of 2026—still above the median longer-term funds rate.”

Adjusting to Higher for Longer

“It was reassuring to hear Chair Powell’s remarks and know that we can continue to look forward to rate cuts at the Fed’s six remaining meetings this year,” said Matt Swerdlow, Senior Director in the Capital Services Group at Ariel Property Advisors. “Fed watchers are forecasting the possibility of a .25% rate cut at the June 13-14 meeting and clients are gearing up for it.”

Swerdlow said the Capital Services team’s screening numbers have risen 35% compared to the same period last year, as clients prepare to reenter the market and refinance in the next 60 to 90 days. Even under the current circumstances he noted that successes are still being procured, often from alternative lenders.

The Ariel team presented one client, which had a maturing bridge loan from 2021, with two options from a non-depository lender—a 6.5% loan with a 30-year amortization, or a 7% non-recourse, full-term interest only loan that offered higher proceeds. Both options cashed out the borrower beyond his cost basis only two years after the acquisition and completion of his business plan. The client selected the interest only loan because he will receive better cash flow via the full-term interest only payments and, therefore, a higher cash on cash return as opposed to the cheaper rate offering an amortized principal and interest payment.

The Ariel team also recently arranged a $5,080,000 equity investment for the acquisition of a 64-unit affordable housing complex in Charlotte, NC, securing equity from a New York-based non-profit, also known as a Community Development Financial Institution. CDFI Funds provide mission-driven capital for the preservation and creation of high quality affordable and workforce housing across the country.

A few weeks before, the same Ariel team closed on a $25 million acquisition loan for a partially occupied, luxury, multifamily building on the Upper West Side. The fixed rate loan with an out-of-state lender funded both the acquisition and immediate repairs that the seller had deferred.

Investment Supporting New York Lenders

New York banks have experienced a rocky year because of weaknesses in the office sector and multifamily assets.

Last year, regulators shut down Signature Bank, one of the most active multifamily lenders in New York City. In December, the FDIC divided up assets in the Signature loan portfolio between Blackstone and its affiliates, Related Fund Management working in conjunction with two nonprofits, and Santander Bank.

Additionally, a private investment group led by former Treasury Secretary Steven Mnuchin came to the rescue with a $1 billion investment in New York Community Bancorp, Inc. in March to strengthen the institution’s balance sheet and restore investor confidence. New York Community Bank, which purchased assets and liabilities from the failed Signature Bank last year, unexpectedly announced a net loss of $2.7 billion in the fourth quarter compared to net income of $207 million for the three months ended September 30, 2023.

Looking Ahead

Ariel’s Investment Sales Group has seen a dramatic increase in asset evaluations, new listings and closings and we’re expecting the momentum to continue in 2024.

This is a welcomed uptick as in 2023 New York City saw investment sales drop 40% year-over-year to $22.1 billion and transactions fall 29% to 1,904, the lowest level in the last decade. While we attributed the downturn to high interest rates, the shift toward hybrid work, and the continued fallout from the HSTPA regulation, we are sensing significant tailwinds leading to more transactions and lending activity.

Multifamily Loan Programs

Portfolio Lenders (Max 75% LTV)
Term Rates
5 Year 6.00% - 6.50%
7 Year 6.25% - 6.50%
10 Year 6.25% - 6.75%
Agency Lenders (Max 80% LTV)
Term Rates
5 Year 6.02% - 6.42%
7 Year 6.03% - 6.43%
10 Year 5.87% - 6.27%

*interest only available

Commercial Loan Programs*

Term Rates
5 Year - Bank 6.50% - 7.50%
7 Year - Bank 6.50% - 7.50%
5 Year - CMBS 6.75% - 7.50%
10 Year - CMBS 6.50% - 7.125%

*full-term interest only available

Construction / Development / Bridge (Floating Over 1-Month Term SOFR)

Type Spread (bps)
Stabilized / Core 275 - 400 bps
Value Add / Core Plus 400 - 550 bps
Re-Position / Opportunistic 550+ bps

Index Rates

Index Rates
5-Year Treasury 4.23%
7-Year Treasury 4.25%
10-Year Treasury 4.25%
Prime Rate 8.50%
30-Day Avg. SOFR 5.32%
1-Month Term SOFR 5.33%
Ameribor Unsecured Overnight Rate 5.43%
Index SOFR Swap
5-Year SOFR Swap 4.11%
7-Year SOFR Swap 4.01%
10-Year SOFR Swap 3.95

More information is available from Matthew Swerdlow at 212.544.9500 ext.56 or e-mail

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