The sunsetting of LIBOR is an issue many in the CRE industry would like to ignore, assuming that it will be worked out. But as Cushman & Wakefield Managing Director Matthew Blair writes in a recent post, LIBOR's end is likely to be messy.
LIBOR, the index most frequently used in pricing floating-rate commercial mortgages, has long been controversial, as it's been at the center of multiple rigging scandals. It's sunsetting by the end of this year, and the recommended alternative in the US is the Secured Overnight Financing Rate.t
"It's a very different benchmark than LIBOR is," Adam Lustig, Partner, Real Estate Practice Group Leader, Bilzin Sumberg, told GlobeSt in an interview last year. "We try to do the best we can to get some language built into the documents to avoid unexpected or bad consequences, which is saying like 'If LIBOR's not available, then the loan converts to a prime rate at the index instead of LIBOR."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
