Shopping Center Business

MAY 2016

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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INDUSTRY OUTLOOK 162 • SHOPPING CENTER BUSINESS • May 2016 other types of lenders. Greater discretion may be applied in the remaining year on loans involving unanchored or shadow-an- chored shopping centers, however, as the maturing economic cycle could slow the pace of retail sales growth. In addition, changes are coming to the CMBS market in December 2016, namely the imposition of the "risk-retention rule" that requires the issuer of CMBS debt to either keep a slice equal to 5 percent of the market value for five years or designate a subordinate bond buyer to assume that risk. Life companies captured a greater piece of the market last year and came into 2016 with new capital to place. This group of lenders remains highly selective, focusing on large, well-located anchored assets in major markets. Bank lenders, mean- while, have shored up balance sheets in recent years and are poised to compete for market share this year. The Federal Reserve's accommodative monetary pol- icy conferred a low cost of capital to these lenders, an advantage that could wane if the central bank raises its benchmark rate more aggressively than anticipated. Though consumer confidence in the U.S. economy is still shaky, as evidenced by the weaker-than-anticipated retail sales figures so far this year, the Federal Reserve's December 2015 rate hike still offers the most unequivocal expression to date of the central bank's confidence in the U.S. economy. As a result, the cen- tral bank has stated its intent to raise its short-term rate to 1 percent in 2016, but the risk of contagion from soft overseas economies and U.S. economic trends may require a reconsideration of that plan. Should wage pressure advance rapidly, it would also place upward pressure on inflation and force the Federal Reserve to carefully consider its monetary policies. These factors are functions of where inter- est rates are headed, which is an import- ant dialogue the retail industry should be having, given the symbiotic relationship between debt and equity. SCB Bill Rose, CRX, is vice president, national director-national retail group, net leased properties group, Marcus & Millichap, and national director, Institutional Property Advisors-Retail. Learn more about our nationwide commercial real estate loan programs for transactions from $1MM - $15MM at (888) 908-2741 or LOANSBYMONEY360.COM FULLY FUNDED. FULLY SECURE. FULLY CERTAIN. Money360 is the future of direct lending in the commercial real estate space. We haven't just built leading-edge technology. We've built a team of true industry leaders who know commercial real estate and how to get deals done. We apply that core experience to every deal we fund, ensuring timeliness and certainty of close. It's time to discover smart, sound, secure lending.

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