—— Fed Hikes Rates by 25 Basis Points; U.S. Mortgage Rates Fall to 5-Week Low; BitRock Launches $100M Fintech Fund; Carvana in $9B Debt Talks; Rakuten Prepares Landmark IPO; Life Storage Gets Acquisition Offer; Big Banks Bearish on Commercial Real Estate
1. Fed Hikes Rates by 25 Basis Points
Today, the Federal Reserve announced a 25 basis point increase in its benchmark interest rate, bringing it to 5%—the highest since 2007.
In its statement, the FOMC said the banking system remains “sound and resilient,” though the long-term effects of recent events remain uncertain. The committee noted that tighter lending conditions for households and businesses could weigh on economic activity, employment, and inflation.
Chair Jerome Powell added that the committee believes more rate hikes may still be necessary, as it remains committed to bringing inflation back down to 2%.
Currently, most Fed officials expect the benchmark rate to peak at 5–5.25% and remain at that level through at least 2024.
The Fed believes the banking system is still strong, but recent turmoil may have lasting consequences.
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2. U.S. Mortgage Rates Fall to 5-Week Low
Data from the Mortgage Bankers Association (MBA) showed that for the week ending March 17, the average 30-year fixed mortgage rate fell by 23 basis points—its largest drop in four months—to a five-week low of 6.48%.
The MBA’s mortgage applications index rose 2.2% during the same period, buoyed by lower borrowing costs.
Due to recent banking turmoil, mortgage rates—closely tied to U.S. Treasury yields—have pulled back slightly. However, banks have tightened lending standards, and future trends will depend heavily on Fed policy.
For homebuyers, higher lending standards and tight housing supply remain serious challenges.
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3. BitRock Launches $100M Fintech Fund
Singapore-based fintech investment firm BitRock Capital is nearing completion of a $100 million fund to invest in SaaS and blockchain companies in China and Southeast Asia.
Backers include logistics real estate operator GLP Pte. The firm plans to finalize fundraising in Q3. The fund is twice the size of BitRock’s first vehicle launched in late 2021 and will primarily target long-term limited partners such as family offices.
BitRock co-founder and CEO Alfred Shang said the fund is highly specialized in fintech and will pursue only top-tier investment opportunities.
Founded in 2018, BitRock has invested in more than 20 companies, including Swiss digital bank Sygnum Bank, London-based digital asset exchange Archax, and Hong Kong insurtech firm One Degree.
Despite regulatory uncertainties in China, BitRock remains optimistic about growth in the region.
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4. Carvana in $9B Debt Talks
Online used-car retailer Carvana is negotiating a $9 billion debt restructuring deal with creditors—potentially its last shot before bankruptcy.
If accepted, the proposal would reduce $1.3 billion of Carvana’s $5.7 billion in unsecured debt and save roughly $100 million in annual interest payments.
In 2021, fueled by stimulus-driven demand, Carvana sold 425,000 cars in one year and saw its market cap soar to $50 billion. But slumping demand and rising interest rates soon crushed its growth story.
Reports indicate that creditors across five tiers of Carvana’s debt could recover 63–81% of principal. These loans mature between 2025 and 2030. Creditors would also receive second-lien claims on vehicle inventory and Carvana’s brand IP, subordinate only to Ally Financial.
Carvana’s creditors stand to receive partial principal recovery and second-lien claims on inventory and intellectual property.
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5. Rakuten Prepares Landmark IPO
Rakuten Group’s banking arm, Rakuten Bank, plans to raise $881 million in what would be Japan’s largest IPO in four years. The bank is set to list on the Tokyo Stock Exchange on April 21.
Rakuten will sell 60 million shares in the offering—16% from the bank and 84% from parent Rakuten Group. An additional 4.4 million shares may be issued if demand exceeds expectations.
In recent years, Rakuten has faced stiff competition in e-commerce from Amazon and has pivoted toward expanding its financial services business.
Amazon has pressured Rakuten’s online retail revenues, prompting its push into fintech.
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6. Life Storage Gets Acquisition Offer
According to sources, self-storage giant Extra Space Storage has made an acquisition offer to rival Life Storage Inc.
Earlier this year, Life Storage rejected a $11 billion offer from Public Storage, saying the bid undervalued the company.
Extra Space is currently working with advisors to finalize its proposal. Its share price fell 1.6%, bringing its market value down to $21 billion.
Life Storage operates more than 1,100 self-storage facilities. Its stock rose 1.1% today, giving it a market cap of $10.7 billion.
Horizontal consolidation in the self-storage industry can reduce competition and expand facility networks.
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7. Big Banks Bearish on Commercial Real Estate
Today, JPMorgan Asset Management CEO George Gatch used a metaphor at a European media summit, likening the Fed’s rate hikes to slamming on the brakes—saying something is bound to go flying through the windshield. He was referring to commercial real estate.
Gatch noted that Fed tightening has burst tech bubbles and triggered banking crises, and he’s concerned high interest rates will hurt commercial real estate developers and lenders. Public asset values have already declined, and private markets may follow.
On Tuesday, Goldman Sachs also warned that commercial real estate faces mounting pressure—banks currently hold $5.6 trillion in CRE loans, and bank financing is a primary funding source for the sector.
A survey released by Bank of America this week shows fund managers are now more bearish on real estate than at any time since October 2020, with commercial and office properties identified as key problem areas.
If the banking crisis continues to spread, commercial real estate could lose a vital source of funding.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.