The Biggest Risk in CRE Transactions

Odegard emphasizes the importance of a smart exit strategy as Winn and Symington listen.

SAN DIEGO—An investor’s exit strategy can make or break the outcome of the deal for that investor because cap rates are so compressed, Seattle Funding Group’s John Odegard said in an interest-rate panel session at ADISA’s Spring Symposium Tuesday. The panel, “Interest-Rate Sensitivity and the Effects on Investment Modeling,” explored how prospective interest-rate hikes could impact investors’ decision-making process in the near future.

Starboard Realty Advisors’ Bill Winn spoke of the direct correlation between interest rates and cap rates and said the cap rate in 10 years should be 50 basis points higher when a property is sold if the interest rate was the same as when the property was purchased.