Going Long: Four Ways to Mitigate the Risk of Long Term, Fixed-rate Lending

Going Long: Four Ways to Mitigate the Risk of Long Term, Fixed-rate Lending
August, 2014

For any Financial Institution that wants to use derivatives to mitigate the interest rate risk associated with longer term, fixed-rate lending, the path forward can be daunting.
 
This bulletin answers the following questions: Where do you start? Which


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Financial Institutions Case Study: Asset Liability Management

Financial Institutions Case Study: Asset Liability Management
Our Client:
A regional bank with a newly issued brokered CD portfolio.
Situation:
Our client was asset-sensitive and had just issued 5yr brokered CDs that paid a fixed rate of interest. The client lends to borrowers at a floating rate of interest plus a credit spread, with a


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Real Estate Case Study: Debt Ratio

Real Estate Case Study: Debt Ratio
Our Client:
A public real estate company specializing in asset management in the hospitality sector.
Situation:
Our client had paid down a significant portion of their floating rate line of credit, leaving them with a fixed/floating rate debt ratio higher than they desired. With hotel assets essentially re-pricing daily,


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Real Estate Case Study: Mezzanine Debt

Real Estate Case Study: Mezzanine Debt
Our Client:
A nationwide owner of hotels.
Situation:
Our client’s hotel portfolio was leveraged with a number of long-term low fixed interest rate loans. Since the origination of the original first mortgage debt, increases in operational efficiency for the portfolio resulted in improved portfolio cash flow. Our client’s desire


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Interest Rate Risk

Interest Rate Risk Management
As a company issues debt, whether to support the acquisition or divestment of an asset, or as part of its M&A activity, it must decide how to manage the financial risk associated with interest rate movement. Regardless of whether they secure fixed or floating rate financing there are associated risks. With


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Interest Rate Hedging

interest rate hedging, Real estate hedging

Solutions to mitigate interest rate volatility
Whether it’s a real estate project or a portfolio of properties, there are inevitable questions about how to protect against changes in interest rates. What is your total exposure? What should be your fixed vs. floating debt ratio? Is there a lender-required cap or swap? What is your refinance…


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