What Tightening Fed Policy Means for CRE Investors

• At last week’s FOMC meeting, the Fed lifted the overnight rate by 50 bps

• They also announced plans to begin Quantitative Tightening in June

• These actions are aimed at curbing inflation, which is at 40-year highs

• Drivers of inflation like labor/material shortages and supply chain woes are still in-place

• As a result, inflation could remain persistently high, forcing further aggressive Fed action

• Investors may target Apartments, Hotels and Self-Storage assets, which can adjust rents quickly during periods of high inflation

• Additionally, investors considering transacting in the near-term may move quickly to lock in affordable debt before rates rise further

• Overall the CRE outlook is healthy with strong consumer balance sheets and positive demographics supporting underlying demand