March 4, 2020
Real Estate Borrowers Are Keeping Their Distance From SOFR, for Now

In 2017, the Secured Overnight Financing Rate (SOFR) was picked as the preferred successor to the U.S. Dollar London Interbank Offered Rate (LIBOR), the widely used...

Real Estate Borrowers Are Keeping Their Distance From SOFR, for Now

March 3, 2020 | Mack Burke | Commercial Observer

In 2017, the Secured Overnight Financing Rate (SOFR) was picked as the preferred successor to the U.S. Dollar London Interbank Offered Rate (LIBOR), the widely used benchmark reference rate index that’s been around since the 1970s and is scheduled to expire at the end of 2021.

Last summer, the Alternative Reference Rate Committee (ARRC), the entity that was tasked with choosing a new reference rate and settled on SOFR, released fallback language for markets to prepare for the transition. Following the release, major lenders and institutional players moved quickly to begin the shift to SOFR. 

Last year, in December alone, there were numerous examples of the conversion. Some major investment banks began implementing ARRC fallback language in all their single-asset, single-borrower (SASB) CMBS securitizations, listing SOFR as the alternative, and on December 12, Freddie Mac issued a CMBS conduit that was all SOFR — the FREMF 2019-KF3 deal. A separate example came a day later on Dec. 13, when Royal Dutch Shell closed on one of the first credit facilities linked to SOFR, a $10 billion revolving credit facility coordinated by Bank of America and Barclays. And earlier this month, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac would no longer purchase loans indexed to LIBOR in a move to encourage their approved lenders to adopt a new benchmark to help avoid any cash flow risks. 

Read Full Article

Recent

Most Popular

Blue Vault Q2 2023 Performance Reports Update

Blue Vault Q2 2023 Performance Reports Update

Blue Vault Q2 2023 Performance Reports Update 10-3-2023 Blue Vault wishes to acknowledge and apologize for the delay in publishing some Q2 2023 NTR Individual Performance Pages (IPPs) as well as the full review. We recently added additional reporting metrics to our IPPs, and that, combined with coverage of all share classes and some additional…
Blue Vault Q2 2023 Performance Reports Update

Blue Vault Q2 2023 Performance Reports Update

Blue Vault Q2 2023 Performance Reports Update 9-25-2023 Blue Vault has published the Q2 2023 Nontraded BDC Industry Review as well as Individual Performance Report and Limited Operations pages for the following offerings (newly published pages in bold font): Nontraded REITS American Healthcare REIT Q2 2023 Apollo Realty Income Solutions Q2 2023 (limited operations) Ares…

Explore

Blue Vault Logo
Don’t miss alts news
and educational events

Subscribe Now