FieldingInvestments.com Property Investment Advisor Brian Fielding Responds to the article, “U.S. Treasury Market Goes Off Script.” The Wall Street Journal recently reported the Short- and Long-Term Yields have narrowed, causing real estate adviser Brian Fielding to note the possible effects on commercial real estate investments. Mr. Fielding expressed concern that the narrowing of two-year and ten-year rates suggests that the investment community expects the Federal Reserve rate to increase sometime within the next year or so. “For those persons out there seeking investment properties, they should keep in mind that the record low interest rates may be moving upward, and thus, change the formulaic return that investors might be projecting for their purchases,” shared Brian Fielding. “When investors look at Net-leased investments being sold at cap rates from the mid four’s to barely over seven percent, even a modest blip in the cost of money can have a dramatic effect on projected returns.” He went on to explain that few investors actually pay all cash for their investment property and often have to take relatively short-term borrowings to meet their investment goals. But if that more speculative “short-term” investor fails to quickly “flip” that asset, he may find that the combination of higher mortgage rates and shorter remaining term on the net lease leads to a dangerous cocktail, but a very good opportunity for well-heeled, re- purchasers. Mr. Fielding suggests that investors take a long-range approach when buying commercial real estate and thereby limit the risk of a change in interest rates put their return at risk. “In fact, we recommend that those who plan to purchase sometime within the near future start building relationships with their local banks and the commercial lending brokers to begin the process of building a professional relationship that can help them track interest rate movement and be more ready to purchase should a unique opportunity present itself but require a faster closing,” shares property investment advisor Brian Fielding.
Fielding Investments tracks actions by the Federal Reserve closely, feeling that not only does its actions largely determine long-term interest rates, but there may be no better way to track pending inflation and measure the overall strength of the economy – important issues when making long-term economic decisions. Fielding Investments prefer to own a careful mix of net-leased retail and office assets, which the company believes to be integral in its efforts to balance its portfolios with businesses that prosper in a strong economy, as well as those that are most likely to benefit from the reverse. “We try to maintain a portfolio with tenants that we expect to do well in a down economy such as perhaps Wal-Mart and the various ‘Dollar Stores,’ with those that seem to prosper when consuming spending is strong,” shares Brian Fielding. “We remain unconvinced that our economy is on the road to full recovery, but that does not dampen our enthusiasm for the ownership of commercial properties; it merely makes us look more closely at our holdings in the effort to maintain a tenant mix that we feel best balances our likely future revenue streams.” For more information about commercial real estate investment and answers to common questions, visit http://fieldinginvestments.com.