CREJ

December 7-December 20, 2016 —

COLORADO REAL ESTATE JOURNAL

— Page 19

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Finance

ell I don’t think

anyone saw that

coming! At least

the pollsters sure didn’t. I am

writing this one week after the

election and you are reading

this probably a month after,

so even though it’s old news,

it’s hard to believe. I also was

thinking about the last year,

and our current world cham-

pions are our Broncos, Cleve-

land, Pittsburgh and Chicago.

The Rust Belt and the Midwest

are back and won the election

for Donald Trump. 2016 felt like

a year of good activity with

continued very low interest

rates but still a lot of difficulty

getting things across the finish

line unless they had to. One

thing is for sure, our days of

easy money and ultra-low rates

are over. It will be interesting to

see what that does to our real

estate market and if it will get

people off the fence.

The line from the first

“Rambo” – “First Blood”

– comes to mind, “It’s over,

Johnny!” Our time of the $3.5

trillion in quantitative easing

done since 2008 and incredibly

low rates is over. Trump has

already mentioned he believes

interest rates

are too low

and the Fed-

eral Reserve

has no dry

p o w d e r

r e m a i n i n g

in its vault.

I think you

will see a

0.25

point

i n c r e a s e

in rates in

D e c e m b e r

and

two

a d d i t i o n a l

increases in

2017, and the

10-year Treasury will approach

3 percent for the first time

in years. This won’t have an

immediate impact on commer-

cial real estate values but it will

come.

Trump also has made com-

ments about banks that are

too big to fail and that smaller

community banks are being

crippled by reserve require-

ments and Dodd-Frank regu-

lations. I think you could see

Glass-Steagall reenacted to

separate deposit-taking institu-

tions from investment bank-

ing. Many have said that Presi-

dent Bill Clinton’s repealing of

Glass-Steagall paved the way

for the financial crisis. I would

not be totally shocked if the

issue surfaced in the near term

of Trump’s presidency.

In addition, something must

be done to help smaller com-

munity banks support the

beginning and middle-market

developer and small business.

I just finished a call with a

“community bank” and the

comment was made that the

company totaling $5 million

in annual growing revenues is

just too small … what?! In the

last six months we have seen

an incredible tightening with

banks and it is only going to

get tighter next year. Banks are

full on commercial real estate

loans and their credit officers

feel like we are coming to the

end of the cycle, thus requir-

ing more equity in projects

but also requiring guarantor

strength to be much stronger.

Banks should not be put in a

position to only lend to those

that have so much liquidity

that they really don’t need the

money. Sort of goes against

the theory behind “community

banks” helping new businesses

and owners grow in the com-

munity, doesn’t it?

Let’s talk positive now! Com-

mercial real estate lenders and

investors still feel like Denver

is one of the top markets in

the country and continue to be

aggressive on deals here. The

lending universe, other than

banks, ranging from life com-

panies, Fannie Mae, Freddie

Mac, commercial mortgage-

backed securities lenders and

other debt funds, all have

increased loan volume goals in

2017 and Denver will remain a

beneficiary of this. My general

feeling is we are at the peak in

the commercial real estate mar-

ket and Denver has enjoyed

the best commercial real estate

market in its history in the last

few years. The questions I con-

tinue to hear are: Are we over-

priced in Denver? Are rents

too high? Are we headed back

into another recession? Are we

at the top of the market and

have nowhere to go but down

from here? My gut is we are

not headed into another “Great

Recession”; we still have run-

way left, but things are start-

ing to change direction. We all

need to be prepared to open

up the checkbook a little wider

to put more equity in that next

project, to pay a more histori-

cally normal interest rate and

keep our market growing.

What just happened and what lies ahead in 2017

Baxter Fain

Managing director,

Capital Markets

Group-Real Estate

Investment Banking,

JLL, Denver

arranged the financing.

“Freddie Mac stepped up in

a big way as usual, financing a

property that fits their mission

goals pertaining to affordabil-

ity and green enhancements,

as well as their streamlined

ability to execute rate locks at

a moment’s notice,” Hallady

said.

MetroGroup Realty

Finance,

a private commercial

mortgage banking firm based

in Newport Beach, California,

has restructured the debt on an

office building in Centennial.

MetroGroup arranged a $20.3

million loan on behalf of the

Dornin Investment Group

for Highland Place, a Class A,

138,771-square-foot building

near Interstate 25 and C-470.

HFF

Continued from Page 18

One thing is

for sure, our

days of easy

money and

ultra-low rates

are over. It will

be interesting

to see what

that does to our

real estate market

and if it will

get people off

the fence.