Burned by a floating rate loan on a strip mall near Akron last month

Locked into a 3 year term back in 2021 and now my rate jumped almost 200 basis points at renewal. Anyone else getting hit hard with these recasts and considering a swap or just riding it out?

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2 Comments

lisa_hill234mo ago

Used to think swaps were a bad bet, but this post changed my mind.

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keith_taylor304mo ago

200 basis points? That's only 2 percent, not trying to downplay it but that's not exactly a massive jump for a commercial strip mall loan. You locked in 2021 when rates were at historic lows, nobody expected them to stay there forever. I'd be more worried about the property's NOI if your tenants are struggling with their own costs. What's your DSCR looking like now? Riding it out might make sense if you got good cash flow, but swapping could lock in a rate that's still way higher than where we might be in 6 months.

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