It’s one of the toughest questions plaguing commercial real estate today: What is to be done with a pileup of maturing — or past-due — loans worth hundreds of billions of dollars when refinancing is all but impossible?
For most of this year, and seemingly since the pandemic began, the most common solution has been to extend loans until financial conditions improve. But any relief on interest rates remains off in the distance, and the most prolific class of commercial real estate lender, regional banks, is under pressure to get CRE off its books.
Barring a shocking economic reversal, some regional banks will be forced to make a deal or foreclose on delinquent loans, which continue to rise in number. One form of deal that could rise to prevalence is the discounted payoff, or DPO, debt negotiators told Bisnow.
“The discussions about [DPOs] are increasing,” said Amy Hatch, vice chair of law firm Polsinelli’s financial services litigation practice. “I can’t say I’ve seen a bunch closing or a bunch happening, but I think it’s on people’s radar as a tool, probably more than a year ago when we were talking about extending to see what happens or finding options for borrowers.”
A discounted payoff is when a lender agrees to be repaid at a lower price than the outstanding balance on a loan. A borrower typically offers a DPO if it has financing lined up, either in the form of a buyer who agrees to pay the DPO price for the building or by obtaining a new loan to retain possession.
When a lender accepts a DPO, it realizes the loss of a loan’s value on its books. For banks, there is no functional difference between a DPO and selling the loan for the discounted price, Newmark Loan Sale Advisory Group Executive Managing Director Brock Cannon said.
But Silicon Valley Bank’s collapse in March came after it sold $1.8B worth of assets at a loss and announced the need to raise more capital, prompting a run on deposits that spiraled out of control. And even though many surviving regional banks want to decrease their exposure to commercial property loans, they have been unwilling to take the losses that doing so would require, whether through outright loan sales or DPOs, Cannon said.
“If you were hearing about DPOs, then it would mean a lot of lenders are taking a lot of losses right now, and it’s just not happening,” he said. “They don’t have the pressure on them to sell loans at a big discount.”
Darkening Skies
The Federal Reserve is poised to raise interest rates again in the next few months and keep them higher for longer than the market expected even six months ago, based on comments Fed Chair Jerome Powell made at the Federal Open Market Committee’s September meeting.
Interest rate hikes put downward pressure on property values, but the uncertainty of where they will end up and how long they will stay there has paralyzed the acquisition market since the second half of last year.
Green Street’s Commercial Property Price Index was down 16% in August from its March 2022 peak, but a lack of sales and appraisal-triggering refinancing deals makes high-level data less useful than it is in most years, Newmark found in its second-quarter U.S. capital markets report.
The collapse in transaction volume this year is making it difficult for anyone to agree on how much properties are worth as maturity dates approach and, in many cases, pass by, MSCI Chief Economist for Real Assets Jim Costello said. Borrowers and lenders are finding themselves at odds in negotiations over extensions and/or workouts.
“I put a low probability on the notion we go back to 2021 and early 2022,” Costello said. “The only other way this could change is if current owners give up the ghost and come to the realization that holding out for market-high prices might not be viable given how much things have changed.”
Second-quarter U.S. debt research reports from Newmark and credit analytics firms Trepp and MSCI all found that much more debt is still on track to mature this year and next than further in the future. The numbers of new loans and willing lenders have plummeted. And delinquency rates continued to rise for CMBS loans across most property types.
“It feels like we’ve been talking about this for a long time, but we’re still early,” CohnReznick Debt Restructuring and Dispute Resolution Managing Director Debra Morgan said. “There’s probably another rate hike or two coming, so the market hasn’t settled into loss, it hasn’t settled into recovery, it hasn’t settled into anything yet.”
Still Extending, Still Pretending
Plenty of borrowers are seeking creative solutions like DPOs and injections of rescue capital like bridge loans or preferred equity as they search for any way to avoid lump-sum payments and the consequences of being unable to come up with the cash, Hatch said. A similar sentiment has been echoed at multiple Bisnow events in the past month, including the 2023 National Finance Summit in New York.
In an environment of falling values and scarce, expensive new debt, discounted payoffs can be beneficial to both borrowers and lenders if extension negotiations and refinancing searches are going nowhere, Related Cos. Fund Management Senior Vice President Sam Friedland said at the National Finance Summit.
Hatch advised on a DPO deal that closed on Thursday, she told Bisnow.
Owners of maturing loans are doing whatever they can to get borrowers to put up enough cash to justify an extension or otherwise keep loans on their books as performing assets, all while facing intense scrutiny over the health of their balance sheets.
“There’s just a bad gap between what borrowers are willing to pay and what lenders are expecting,” Cannon said. “Borrowers aren’t motivated to sell their property to pay down loans right now. And that’s a big mistake lenders are making, letting borrowers drive the bus.”
In Q2, banks “charged off” $459M of office-backed debt, meaning they accepted that much in future losses for loans on their balance sheets, according to Trepp data. That was more than triple what banks charged off in Q1, which at $149M was also over triple the $49M banks charged off in Q4 2022.
Net charge-offs also rose sharply for hotels in Q2, while multifamily net charge-offs rose modestly, Trepp found. Even though short-term loans backed by apartment buildings should be especially damaged by the changes to the economy in the past year and a half, government-sponsored entities Fannie Mae and Freddie Mac are performing their function of keeping liquidity alive in multifamily, the Mortgage Bankers Association found in its Q2 omnibus report released Friday.
Lenders are still more apt to write down, or charge off, the value of a loan as it sits on their books than accept a DPO, Cannon said.
“I don’t understand the marks they’re writing down to. No one really does,” Cannon said of banks. “But it helps them change the performance of the loan on the books. If you do DPO with a borrower, you’ve got to report that as a loss. It’s like if you do a loan sale at 50% of par, you have to tell your investors that, especially if you’re a public bank.”
Something’s Gotta Give
What helped restart debt markets in the wake of the Global Financial Crisis was the Federal Deposit Insurance Corp. selling the loan books and foreclosed properties of hundreds of banks that had failed, Cannon said. Only three banks failed this spring, but the resulting crisis of confidence accelerated banks’ retreat from commercial lending, according to Newmark’s Q2 report.
The FDIC is marketing Signature Bank’s $33B commercial loan portfolio for sale in what could be a watershed moment for pricing comparisons. For now, lenders are using extension negotiations to clean up their paper, like getting borrowers to waive liability clauses, CohnReznick’s Morgan said.
“Forbearances until the first quarter of next year I’m seeing a lot,” she said. “We’re either going to see a bunch more forbearance agreements in the Q1, or we’ll see paper being sold.”
One public company has made a DPO deal in the past two months: Retail REIT Urban Edge Properties paid $72.5M on what had been a $117M CMBS loan for a mall in Puerto Rico by exercising an option added in a 2020 modification, it announced Aug. 30. Urban Edge obtained a new $82M loan from Banco Popular de Puerto Rico to pay for the DPO. The company declined to comment through a spokesperson.
Lenders will be more likely to accept DPOs on office buildings if and when they accept the reality that those properties have lost a large chunk of value, Cannon said. For all sectors, acknowledging that the environment is unlikely to improve until 2025 at the earliest is only a matter of time for many lenders, Hatch said.
“It makes more sense right now for a lender to say the borrower put it out to the market, this is the highest value they can get, and this borrower is otherwise going to default,” she said.
Avoiding the expensive and drawn-out foreclosure process would be among the most likely reasons for a lender to agree to a DPO, Hatch and Morgan said. Rising delinquencies indicate that more and more borrowers are losing the patience or the ability to keep up with payments on the property, which all but forces a lender’s hand.
“The more recent discussions I’ve had on [DPOs] is just lenders making the decision in the current market that they’re not seeing a lot of upside to going through the enforcement process,” Hatch said. “That would involve becoming the owner of those properties and trying to sell them at a better price.”
In addition to acknowledging a property’s loss of value, a lender could be convinced to agree to a DPO because doing so would free up some capital to make new loans, Morgan and Hatch said.
Even so, extensions and short-term forbearance agreements are still the most common resolutions being reached this autumn, as the holidays rapidly approach and complex deals seem less likely to get done before the end of the year, sources told Bisnow. But the longer lenders delay their final decisions, the more appealing DPOs could become.
“We’re starting to see more banks calling us, saying, ‘Uh-oh, we should have sold that loan a year ago,’” Cannon said.
Source: Bisnow
CRE Transactions Expected to Fall 5% Next Year Amid Rising Treasury Yields
To understand where interest rates might go, watching the actions of the Federal Reserve is important, of course, but so is monitoring yields of Treasury instruments. Whether bonds, notes, or bills, depending on the term, they have great sway.
Treasurys are considered safe investments, and so are one of those practical baselines for calculating risk adjusted returns. As the yields rise, so do interest rates.
But as is true with anything, trying to track every movement can become confusing.
Based on such data and their analysis, CBRE said that it lowered growth expectations for CRE investment rate volumes in 2024. The projection had been +15%; now they are -5%.
And if they were correct that the 10-year would continue a strong upward pace, maybe the impact of higher interest rates would have such an impact. They might even be correct.
But this is where following short-term data flows can drive people to potentially make mistakes.
On Wednesday November 1, the 10-year dropped from the previous day’s 4.88% yield to 4.77%. Then on Thursday, it hit to 4.67%, and Friday closed out at 4.57%. Similarly, the 2-year yield went from 5.07% on Tuesday to 4.83% on Friday.
Econometric models can be wrong. Then again, they could be correct, look further out, and maybe yields will rebound in the long run.
But then, CBRE wrote that other than office, the “relative health” of CRE property types “makes forward internal rates of return (IRRs) increasingly attractive.”
This is why solid hedging strategies make a great deal of sense.
Source: GlobeSt.
The Odds Are Stacked Against Maturities Refinancing
Almost any problem can be solved if there’s a realistic plan and the necessary materials are at hand. But miss what you need for the repair and there’s only so far that you can go. That’s a problem facing commercial real estate right now.
There is an “historic volume of mortgage maturities,” as a recent Trepp analysis of Federal Reserve Flow of Funds data showed: $2.78 trillion in commercial loans coming due by 2027.
But will there be enough money to keep the bulk out of trouble? Up until Wednesday, the 10-year yields were moving tentatively toward 5% and have been at levels not seen since 2007. The higher Treasury yields go, the harder it is to argue for riskier investments without a lot of extra return. Shorter-term Treasury yields are even higher.
Even with a slight retreat of the 10-year yield with the Fed’s hold on interest rates and Treasury slowing expansion of planned new bond issuance, there is still abundant safety at respectable returns that becomes difficult to compete with. CRE property valuations have plummeted, with the Fed saying that after the reductions they were still elevated beyond where they should be.
Too many of the maturing loans were granted under easy money conditions and bigger amounts of leverage than are typically available at the present. Deals that need refinancing often make no financial sense because of the amount of capital needed to get new financing is prohibitive.
That is why the news on reduced funding for CRE is worrisome. Third quarter private real estate fundraising of $18.2 billion plummeted by 71% compared to the $63.4 billion of Q2, according to Preqin dataquoted by Bloomberg. Global property transactions fell from $31.9 billion in the second quarter to $26.9 billion in the third.
As the Wall Street Journal noted, CRE lending is at “historically low levels.”
All this raises the question of which projects will be able to afford refinancing — and if they can’t, who will be left holding the bag for the mortgages on those properties.
Source: GlobeSt.
A Sale-Leaseback Conundrum: Elevated Valuations Could Mean Later Problems
The Federal Reserve’s October 2023 Financial Stability Report was not the sort of reading for CRE professionals to quell their fevered concerns about the industry’s immediate future.
The implications might apply to any CRE property, but on reflection, sale-leaseback transactions seem like they might be particularly prone to adverse effects under the current conditions. The problem that appears for both buyer and seller is the potential longevity of the arrangement. Getting caught by an erroneous valuation is bad enough in the short term. Over a longer period, the effect can be magnified, with more to regret over an arrangement that will run years and possibly decades.
Under a sale-leaseback, the initial owner of a property is also the occupant. That owner decides to sell the property to an investor that will become the new owner and landlord.
The initial owner wants to use the property, often over a long period of time because that party prefers to keep control for years at least or perhaps decades. So, as part of the deal, that party agrees to remain a tenant, often on a net lease basis.
It’s a common type of arrangement. The first owner wants the sale to free capital locked in the building that might be put to better use, like R&D, acquiring another business, or expanding into a new sales territory.
In normal times, understanding the true value of the property is fairly straightforward. But currently, that isn’t possible because there is a lack of price discovery. If, as the Fed suggests, properties are overvalued, then the seller might seem to get a premium, assuming that an experienced buyer won’t recognize the danger, which a bit of a stretch.
However, say the transaction happens on that valuation. The buyer will need rents going forward that justified the price it paid, and they would need to be higher than true market rents. Overly high valuation likely means higher taxes that are paid by the seller. It could be that taxes would eventually come down, but it would require the local government to reassess the property.
This doesn’t mean that a sale-leaseback with net lease can’t make sense, but it might require more thought and negotiation for changing conditions.
Source: GlobeSt.
The Fed Says CRE Valuations Are Still Elevated
The Federal Reserve’s October 2023 Financial Stability Report reads like a slightly early major Halloween trick for commercial real estate — no treat in the pages. Overly high asset valuations, even after all that’s happened so far, and ongoing high interest rates are flashing warning signs for the central bank.
One aspect is of particular concern to CRE professionals.
First, the overall view, based on a periodic survey the Federal Reserve Bank of New York conducts, the most recent having taken place from August 10 to October 4. Here is the top line:
The grim views are all focused on real estate, whether commercial or residential. For a bit of moderation, the survey was of 25 people, “including professionals at broker-dealers, investment funds, research and advisory fi rms, and academics,” the Fed wrote.
Far from a representative sample, but given the expertise, concerning. About 70% of the experts pointed to commercial and residential real estate as among the biggest risks over the next 12 to 18 months. The only other factors gaining that type of attention were a pairing of persistent inflation and monetary tightening. Auspicious company.
What is an apparent puzzlement in the Fed’s report is that even as prices have continued to decline, real estate valuations have remained elevated.
Office sector prices are particularly elevated, “where fundamentals are especially weak for offices in central business districts, with vacancy rates increasing further and rent growth declining since the May report.” But that doesn’t leave other sectors free and clear.
Some part, maybe significant, of this may be the ongoing lack of price discovery. With transactions down and many sellers holding off, waiting for improved pricing, while a lot of buyers look for bargains in distress, it’s hard to tell how much properties should be worth. CRE has the possibility of seeing significant additional drops in valuation, which would then cause even more problems with refinancing.
Source: GlobeSt.
CRE Loan Delinquencies Post Four Consecutive Quarter Of Increases
Delinquency rates for mortgages backed by commercial and multifamily properties increased during the third quarter of 2023, according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance (CREF) Loan Performance Survey. The delinquency rate for loans backed by commercial properties has now increased for four consecutive quarters.
Source: Connect CRE
Should You Sell Your Commercial Property Before Your Loan Matures?
By Ron Osborne, Managing Director
Sperry Commercial Global Affilates | RJ Realty
The decision of whether or not to sell a commercial property before a low-interest rate loan matures and needs to be refinanced at a higher interest rate is a complex financial decision that depends on various factors.
Here are some considerations to keep in mind:
Ultimately, the decision to sell a commercial property or refinance before a low-interest rate loan matures depends on your specific financial situation (can you add equity that will be required to lower the loan amount to the lenders requirements), investment goals, and market conditions. It’s advisable to consult with financial advisors, real estate professionals, and mortgage experts to make an informed decision based on your unique circumstances.
Top 15 CRE Investing Mistakes
The CRE industry is different than all other industries in that it is a transaction-based model. The lifeblood of the industry is dependent on sale, financing, and lease transactions. The more transactions there are, the more money the industry and everyone in it makes and the more successful the business. 2021 was a record year for transaction volumes and a phenomenal boom year for CRE.
The most successful companies and individuals in the industry are usually adept at selling, financing and/or leasing CRE property. However, in pursuing these transactions the same key mistakes are made over and over again which usually results in poor performance, the loss of equity in a property or the loss of the property in foreclosure. Below are the 15 biggest investing mistakes in CRE that are the root cause of bad deals, according to Joseph J. Ori, Executive Managing Director at Paramount Capital Corporation, a CRE Advisory Firm.
Source: GlobeSt.
How Interest Rates, Debt Coverage Ratios And Loan-To-Value Ratios Affect The Value Of Commercial Property
By Ron Osborne, Managing Director
Sperry Commercial Global Affilates | RJ Realty
Interest rates, debt coverage ratios (DCR), and loan-to-value (LTV) ratios are important factors that can significantly impact the value of commercial property. These factors are closely related to the financing and income potential of a commercial property, and they are often considered by investors and lenders when assessing the value and risk associated with a property. Here’s how each of these factors can affect the value of commercial property:
Interest Rates
Debt Coverage Ratios (DCR)
Loan-to-Value (LTV) Ratios
In summary, interest rates, debt coverage ratios, and loan-to-value ratios are interrelated and play critical roles in determining the value of commercial properties. Lower interest rates, higher DCRs, and lower LTV ratios typically support higher property values, while the opposite conditions may have the opposite effect. It’s essential for investors and lenders to carefully consider these factors when assessing the attractiveness and risk associated with a commercial property investment.
Could Discounted Loan Payoffs Be What Finally Restarts The CRE Debt Market?
It’s one of the toughest questions plaguing commercial real estate today: What is to be done with a pileup of maturing — or past-due — loans worth hundreds of billions of dollars when refinancing is all but impossible?
For most of this year, and seemingly since the pandemic began, the most common solution has been to extend loans until financial conditions improve. But any relief on interest rates remains off in the distance, and the most prolific class of commercial real estate lender, regional banks, is under pressure to get CRE off its books.
Barring a shocking economic reversal, some regional banks will be forced to make a deal or foreclose on delinquent loans, which continue to rise in number. One form of deal that could rise to prevalence is the discounted payoff, or DPO, debt negotiators told Bisnow.
A discounted payoff is when a lender agrees to be repaid at a lower price than the outstanding balance on a loan. A borrower typically offers a DPO if it has financing lined up, either in the form of a buyer who agrees to pay the DPO price for the building or by obtaining a new loan to retain possession.
When a lender accepts a DPO, it realizes the loss of a loan’s value on its books. For banks, there is no functional difference between a DPO and selling the loan for the discounted price, Newmark Loan Sale Advisory Group Executive Managing Director Brock Cannon said.
But Silicon Valley Bank’s collapse in March came after it sold $1.8B worth of assets at a loss and announced the need to raise more capital, prompting a run on deposits that spiraled out of control. And even though many surviving regional banks want to decrease their exposure to commercial property loans, they have been unwilling to take the losses that doing so would require, whether through outright loan sales or DPOs, Cannon said.
Darkening Skies
The Federal Reserve is poised to raise interest rates again in the next few months and keep them higher for longer than the market expected even six months ago, based on comments Fed Chair Jerome Powell made at the Federal Open Market Committee’s September meeting.
Interest rate hikes put downward pressure on property values, but the uncertainty of where they will end up and how long they will stay there has paralyzed the acquisition market since the second half of last year.
Green Street’s Commercial Property Price Index was down 16% in August from its March 2022 peak, but a lack of sales and appraisal-triggering refinancing deals makes high-level data less useful than it is in most years, Newmark found in its second-quarter U.S. capital markets report.
The collapse in transaction volume this year is making it difficult for anyone to agree on how much properties are worth as maturity dates approach and, in many cases, pass by, MSCI Chief Economist for Real Assets Jim Costello said. Borrowers and lenders are finding themselves at odds in negotiations over extensions and/or workouts.
Second-quarter U.S. debt research reports from Newmark and credit analytics firms Trepp and MSCI all found that much more debt is still on track to mature this year and next than further in the future. The numbers of new loans and willing lenders have plummeted. And delinquency rates continued to rise for CMBS loans across most property types.
Still Extending, Still Pretending
Plenty of borrowers are seeking creative solutions like DPOs and injections of rescue capital like bridge loans or preferred equity as they search for any way to avoid lump-sum payments and the consequences of being unable to come up with the cash, Hatch said. A similar sentiment has been echoed at multiple Bisnow events in the past month, including the 2023 National Finance Summit in New York.
In an environment of falling values and scarce, expensive new debt, discounted payoffs can be beneficial to both borrowers and lenders if extension negotiations and refinancing searches are going nowhere, Related Cos. Fund Management Senior Vice President Sam Friedland said at the National Finance Summit.
Hatch advised on a DPO deal that closed on Thursday, she told Bisnow.
Owners of maturing loans are doing whatever they can to get borrowers to put up enough cash to justify an extension or otherwise keep loans on their books as performing assets, all while facing intense scrutiny over the health of their balance sheets.
“There’s just a bad gap between what borrowers are willing to pay and what lenders are expecting,” Cannon said. “Borrowers aren’t motivated to sell their property to pay down loans right now. And that’s a big mistake lenders are making, letting borrowers drive the bus.”
In Q2, banks “charged off” $459M of office-backed debt, meaning they accepted that much in future losses for loans on their balance sheets, according to Trepp data. That was more than triple what banks charged off in Q1, which at $149M was also over triple the $49M banks charged off in Q4 2022.
Net charge-offs also rose sharply for hotels in Q2, while multifamily net charge-offs rose modestly, Trepp found. Even though short-term loans backed by apartment buildings should be especially damaged by the changes to the economy in the past year and a half, government-sponsored entities Fannie Mae and Freddie Mac are performing their function of keeping liquidity alive in multifamily, the Mortgage Bankers Association found in its Q2 omnibus report released Friday.
Lenders are still more apt to write down, or charge off, the value of a loan as it sits on their books than accept a DPO, Cannon said.
Something’s Gotta Give
What helped restart debt markets in the wake of the Global Financial Crisis was the Federal Deposit Insurance Corp. selling the loan books and foreclosed properties of hundreds of banks that had failed, Cannon said. Only three banks failed this spring, but the resulting crisis of confidence accelerated banks’ retreat from commercial lending, according to Newmark’s Q2 report.
The FDIC is marketing Signature Bank’s $33B commercial loan portfolio for sale in what could be a watershed moment for pricing comparisons. For now, lenders are using extension negotiations to clean up their paper, like getting borrowers to waive liability clauses, CohnReznick’s Morgan said.
One public company has made a DPO deal in the past two months: Retail REIT Urban Edge Properties paid $72.5M on what had been a $117M CMBS loan for a mall in Puerto Rico by exercising an option added in a 2020 modification, it announced Aug. 30. Urban Edge obtained a new $82M loan from Banco Popular de Puerto Rico to pay for the DPO. The company declined to comment through a spokesperson.
Lenders will be more likely to accept DPOs on office buildings if and when they accept the reality that those properties have lost a large chunk of value, Cannon said. For all sectors, acknowledging that the environment is unlikely to improve until 2025 at the earliest is only a matter of time for many lenders, Hatch said.
Avoiding the expensive and drawn-out foreclosure process would be among the most likely reasons for a lender to agree to a DPO, Hatch and Morgan said. Rising delinquencies indicate that more and more borrowers are losing the patience or the ability to keep up with payments on the property, which all but forces a lender’s hand.
In addition to acknowledging a property’s loss of value, a lender could be convinced to agree to a DPO because doing so would free up some capital to make new loans, Morgan and Hatch said.
Even so, extensions and short-term forbearance agreements are still the most common resolutions being reached this autumn, as the holidays rapidly approach and complex deals seem less likely to get done before the end of the year, sources told Bisnow. But the longer lenders delay their final decisions, the more appealing DPOs could become.
Source: Bisnow
The Ripple Effect: How Interest Rates Impact Insurance Premiums For Commercial Properties In Florida
Commercial property owners in Florida are no strangers to the unique challenges posed by the state’s unpredictable weather patterns and natural disasters. To safeguard their investments, property owners often rely on insurance coverage. However, what many may not realize is that insurance premiums for commercial properties in Florida can be significantly influenced by another factor – interest rates. In this article, we will explore how interest rates affect insurance premiums for commercial properties in the Sunshine State.
The Link between Interest Rates and Insurance Premiums
Interest rates play a crucial role in shaping insurance premiums. These rates, set by central banks, impact the overall financial climate. When interest rates rise, insurance companies will incur higher costs for re-insurance and investment returns and maintaining reserves. Consequently, they may adjust their premium rates to compensate for these increased expenses.
In Florida, where hurricanes, floods, and other natural disasters (World Wide) are a constant threat, insurance premiums can already be substantial. When interest rates rise, insurance companies may increase premiums further to mitigate financial risks, as they may need to pay out larger claims due to more frequent and severe weather events.
Mitigating the Impact
While property owners may not have control over interest rate fluctuations, they can take steps to mitigate the impact of rising interest rates on insurance premiums:
Conclusion
Interest rates are a hidden variable that can significantly influence insurance premiums for commercial properties in Florida. As property owners brace themselves for the unpredictable weather patterns of the region, they should also keep an eye on interest rate trends and consider strategies to manage the impact on their insurance costs. By staying informed and taking proactive measures, property owners can better protect their investments and ensure their businesses thrive, come rain or shine.