Low interest rates arefueling retail refinancing activity. There is strong demand forrefinancing deals as these owners are looking to lock in lowinterest rates, and many owners are able to reduce their currentrate by 100 basis points. The deal makes sense for many owners ofretail assets, who are able to increase cash flow as a result.


"With interest rates still at record lows, we are seeing a highvolume of landlords continuing to take advantage of refinancing,"Ben Townsend of SRS Real EstatePartners' debt & equity team, tells GlobeSt.com. "Manyof our clients have been able to reduce their rate by more than 100basis points while also pulling out additional equity to invest inmore opportunities. Often times, even if an owner can lower anasset's existing rate by 50 basis points, it still makes sense tolook at the increase in cash flow after re-amortizing a loan."


Retail owners interested in refinancing with the new low rateshould have a professional run the numbers to see if it makessense. "For example, if an investor secured a $10 million loan fiveyears ago at 5% on a 25-year amortization, the yearly debt serviceis $701,416," says Townsend. "Over the course of 5 years the ownerwould have paid down $1,141,981 of the principal balance. Now, with$8,858,018 remaining on that loan, the debt service is still$701,416 per year. Therefore, if an owner refinances that balancetoday at 3.75% with an interest only loan, they would only pay$332,175 per year in debt service, a savings of about $370,000 peryear."


Townsend also recommends finding someone that is an expert inthese deals. "Invest in hiring a commercial mortgage professionalthat is an expert in this field," says Townsend. "Unfortunately,many clients are left at the alter by someone who is unable toperform on what they said they would do."


As a result of this demand, Townsend and his team closed $1.5billion in retail transactions last year. That has allowed us toconnect with the top lenders in every market across the country,"he says. "As such, we know right away what is achievable and who isthe best fit. It doesn't matter if the deal is in a market with 1million people or 1,000 people, a well-versed professional in thisfield will provide certainty of execution and the most competitiveterms available."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.