{"id":1004133898,"date":"2015-12-18T07:52:18","date_gmt":"2015-12-18T15:52:18","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004133898"},"modified":"2022-12-07T09:12:45","modified_gmt":"2022-12-07T17:12:45","slug":"fed-hikes-impact-on-cre","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/","title":{"rendered":"Fed Hike\u2019s Impact on CRE"},"content":{"rendered":"

By Keith Loria, Contributing Editor<\/p>\n

\"Katai\"<\/a>

Ernie Katai, Berkadia\u2019s executive vp<\/p><\/div>\n

In a sign of how much the economy has healed since the Great Recession, the Federal Reserve raised its key interest rate from a range of 0 to 0.25 percent to a range of 0.25 to 0.5 percent.<\/p>\n

\u201cThe way I look at it is this is the Fed\u2019s way of signaling they have some confidence in the economy,\u201d Ernie Katai, Berkadia\u2019s executive vice president, head of production, told Commercial Property Executive<\/em>. \u201cWhile the economy has shown some capability in recovery, it\u2019s not where people want it to be yet, and I could almost guarantee it\u2019s not where the Fed wants it to be, but people are somewhat comfortable that this will be more of a methodical, slower approach.\u201d<\/p>\n

The appetite for real estate is significant and continues to be strong, and the rate hike\u2019s affect on commercial real estate should be minimal.<\/p>\n

\u201cThe one thing we noticed with banks is construction money seems like it\u2019s getting tighter and banks are putting their efforts on better borrowers. I think you will continue to see more quality play by the banks,\u201d Katai said. \u201cThere probably is a little more impact on construction dollars than people might like to see, but I don\u2019t think it\u2019s anything that will create any real problems.\u201d<\/p>\n

According to Katai, one thing the Fed did that people in the business were happy about was telegraph that they were going to do this, so it didn\u2019t take anyone by surprise. What\u2019s critical looking into the future is the pace and timing of any future increases.<\/p>\n

\u201cAs acquisitions happen, I think people will be very conscious and keep an eye on the rates,\u201d he said. \u201cI think the good news is we continue to see a liquidity on the equity markets providing equity for real estate deals, and that continues to be very strong.\u201d<\/p>\n

Compared to its last forecast in September, the Fed raised its expectations for growth next year to 2.4 percent, up from 2.3 percent. It also lowered its projection for unemployment in 2016 to 4.7 percent, down from 4.8 percent.<\/p>\n

\u201cI feel confident about the fundamentals driving the U.S. economy, the health of U.S. households, and domestic spending,\u201d Fed chief Janet Yellen said during a press conference. \u201cThere are pressures on some sectors of the economy, particularly manufacturing, and the energy sector…but the underlying health of the U.S. economy I consider to be quite sound.\u201d<\/p>\n

Also of concern to the industry is a new tax bill, proposed by congressional leaders, which could prevent companies from spinning off their real estate assets into REITs.<\/p>\n

\u201cThe tax bill, if enacted, would not prohibit such transactions, but would instead make them taxable in a manner that could produce a substantial disincentive to engage in these practices going forward,\u201d Kevin Anderson, a tax partner with BDO\u2019s National Tax Office, told CPE<\/em>. \u201cIts primary impact will be on corporations that currently conduct one or more active businesses but seek to separate their real estate from their business operations, such as Darden, which completed a spin-off, or McDonalds, which considered but did not pursue one.\u201d<\/p>\n

He added that it will not affect the division of one REIT into two REITs, nor will it affect the spin-off of certain taxable REIT subsidiaries by existing REITs.\u00a0Thus, as a practical matter, it will slow down or halt altogether the separation of real estate from operating businesses through spin-off transactions, as such transactions would now be taxable.<\/p>\n

Affected transactions will be taxable under the new rules if they are completed on or after Dec. 7, with one exception.\u00a0If a corporation had submitted a request for a private letter ruling with the Internal Revenue Service on or before Dec. 7 that is still pending as of that date, it may pursue the transaction without becoming subject to the new legislation.<\/p>\n

\u201cFor transactions completed after the effective date of the legislation, the corporation making the spin-off would recognize taxable gain as if they had sold the real estate assets for their fair market value,\u201d Anderson said. \u201cIn addition, shareholders could recognize taxable dividend income or capital gain, depending on how the transaction is structured.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The Federal Reserve has raised its key interest rate. Is this a good sign for commercial real estate?<\/p>\n","protected":false},"author":451,"featured_media":1004133938,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,23891,21742],"tags":[],"class_list":["post-1004133898","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-national","category-latest"],"acf":[],"yoast_head":"\nFed Hike\u2019s Impact on CRE - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fed Hike\u2019s Impact on CRE\" \/>\n<meta property=\"og:description\" content=\"The Federal Reserve has raised its key interest rate. Is this a good sign for commercial real estate?\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2015-12-18T15:52:18+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-07T17:12:45+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/focus-interest-rates-e1545278264320.png\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"600\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Keith Loria\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/\"},\"author\":{\"name\":\"Keith Loria\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#\\\/schema\\\/person\\\/aaa29b723dad85f2444ae3cb0c4d735f\"},\"headline\":\"Fed Hike\u2019s Impact on CRE\",\"datePublished\":\"2015-12-18T15:52:18+00:00\",\"dateModified\":\"2022-12-07T17:12:45+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/\"},\"wordCount\":716,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/wp-content\\\/uploads\\\/sites\\\/46\\\/2015\\\/12\\\/focus-interest-rates-e1545278264320.png\",\"articleSection\":[\"Featured\",\"Finance\",\"National\",\"News\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/\",\"url\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/\",\"name\":\"Fed Hike\u2019s Impact on CRE - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/wp-content\\\/uploads\\\/sites\\\/46\\\/2015\\\/12\\\/focus-interest-rates-e1545278264320.png\",\"datePublished\":\"2015-12-18T15:52:18+00:00\",\"dateModified\":\"2022-12-07T17:12:45+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#\\\/schema\\\/person\\\/aaa29b723dad85f2444ae3cb0c4d735f\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/#primaryimage\",\"url\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/wp-content\\\/uploads\\\/sites\\\/46\\\/2015\\\/12\\\/focus-interest-rates-e1545278264320.png\",\"contentUrl\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/wp-content\\\/uploads\\\/sites\\\/46\\\/2015\\\/12\\\/focus-interest-rates-e1545278264320.png\",\"width\":800,\"height\":600},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fed-hikes-impact-on-cre\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Fed Hike\u2019s Impact on CRE\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#website\",\"url\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/\",\"name\":\"Commercial Property Executive\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#\\\/schema\\\/person\\\/aaa29b723dad85f2444ae3cb0c4d735f\",\"name\":\"Keith Loria\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/c971a04cf612cbf81bf5ac2e5ca5dfe85c32fa0d44d16ce044eee3b59755107d?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/c971a04cf612cbf81bf5ac2e5ca5dfe85c32fa0d44d16ce044eee3b59755107d?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/c971a04cf612cbf81bf5ac2e5ca5dfe85c32fa0d44d16ce044eee3b59755107d?s=96&d=mm&r=g\",\"caption\":\"Keith Loria\"},\"url\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/author\\\/keith-loria\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Fed Hike\u2019s Impact on CRE - Commercial Property Executive","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/","og_locale":"en_US","og_type":"article","og_title":"Fed Hike\u2019s Impact on CRE","og_description":"The Federal Reserve has raised its key interest rate. Is this a good sign for commercial real estate?","og_url":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/","og_site_name":"Commercial Property Executive","article_publisher":"https:\/\/www.facebook.com\/CPExecutive","article_published_time":"2015-12-18T15:52:18+00:00","article_modified_time":"2022-12-07T17:12:45+00:00","og_image":[{"width":800,"height":600,"url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/focus-interest-rates-e1545278264320.png","type":"image\/png"}],"author":"Keith Loria","twitter_card":"summary_large_image","twitter_creator":"@cpexecutive","twitter_site":"@cpexecutive","schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/#article","isPartOf":{"@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/"},"author":{"name":"Keith Loria","@id":"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/aaa29b723dad85f2444ae3cb0c4d735f"},"headline":"Fed Hike\u2019s Impact on CRE","datePublished":"2015-12-18T15:52:18+00:00","dateModified":"2022-12-07T17:12:45+00:00","mainEntityOfPage":{"@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/"},"wordCount":716,"commentCount":0,"image":{"@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/#primaryimage"},"thumbnailUrl":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/focus-interest-rates-e1545278264320.png","articleSection":["Featured","Finance","National","News"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/","url":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/","name":"Fed Hike\u2019s Impact on CRE - Commercial Property Executive","isPartOf":{"@id":"https:\/\/www.commercialsearch.com\/news\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/#primaryimage"},"image":{"@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/#primaryimage"},"thumbnailUrl":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/focus-interest-rates-e1545278264320.png","datePublished":"2015-12-18T15:52:18+00:00","dateModified":"2022-12-07T17:12:45+00:00","author":{"@id":"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/aaa29b723dad85f2444ae3cb0c4d735f"},"breadcrumb":{"@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/#primaryimage","url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/focus-interest-rates-e1545278264320.png","contentUrl":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/focus-interest-rates-e1545278264320.png","width":800,"height":600},{"@type":"BreadcrumbList","@id":"https:\/\/www.commercialsearch.com\/news\/fed-hikes-impact-on-cre\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.commercialsearch.com\/news\/"},{"@type":"ListItem","position":2,"name":"Fed Hike\u2019s Impact on CRE"}]},{"@type":"WebSite","@id":"https:\/\/www.commercialsearch.com\/news\/#website","url":"https:\/\/www.commercialsearch.com\/news\/","name":"Commercial Property Executive","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.commercialsearch.com\/news\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/aaa29b723dad85f2444ae3cb0c4d735f","name":"Keith Loria","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/c971a04cf612cbf81bf5ac2e5ca5dfe85c32fa0d44d16ce044eee3b59755107d?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/c971a04cf612cbf81bf5ac2e5ca5dfe85c32fa0d44d16ce044eee3b59755107d?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/c971a04cf612cbf81bf5ac2e5ca5dfe85c32fa0d44d16ce044eee3b59755107d?s=96&d=mm&r=g","caption":"Keith Loria"},"url":"https:\/\/www.commercialsearch.com\/news\/author\/keith-loria\/"}]}},"jetpack_featured_media_url":"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/focus-interest-rates-e1545278264320.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts\/1004133898","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/users\/451"}],"replies":[{"embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/comments?post=1004133898"}],"version-history":[{"count":1,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts\/1004133898\/revisions"}],"predecessor-version":[{"id":1004624004,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/posts\/1004133898\/revisions\/1004624004"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/media\/1004133938"}],"wp:attachment":[{"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/media?parent=1004133898"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/categories?post=1004133898"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.commercialsearch.com\/news\/wp-json\/wp\/v2\/tags?post=1004133898"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}