The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders narrowed significantly (17 basis points on average) with multifamily spreads breaking the 200 basis point barrier between sanity and complete madness. Less than 200 over the 10-year curve seems a little too low a spread to compensate for the risks associated with making a loan secured by an operating business. During the period, 10-year Treasury bond yields were flat, with average all-in cost equal to 4.66 percent.
Asking Spreads over U.S. Treasury Bonds in Basis Points (10-year Commercial and Multifamily Mortgage Loans with 50% to 59% Loan-to-Value ratios) |
|
12/31 |
10/8 |
10/15 |
10/22 |
10/29 |
11/5 |
Office |
342 |
240 |
248 |
244 |
253 |
228 |
Retail |
326 |
224 |
233 |
230 |
234 |
213 |
Multifamily |
318 |
208 |
207 |
212 |
205 |
198 |
Industrial |
333 |
221 |
231 |
229 |
226 |
211 |
|
|
|
|
|
|
|
Average Asking Spread |
330 |
224 |
231 |
229 |
230 |
213 |
|
|
|
|
|
|
|
10-Year Treasury |
3.83% |
2.56% |
2.55% |
2.60% |
2.53% |
2.53% |
Source: Commercial Mortgage Alert; Trepp. |
Spreads in the October 13th Cushman & Wakefield Sonnenblick-Goldman fixed and floating mortgage rate survey (below) remained basically unchanged from the prior survey period as lenders appear content to write loans in the high 4.00 to low 5.00 percent range, a trading range most likely to be vogue for the balance of 2010.
Property Type |
Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages |
|
1/6/10 |
8/31/10 |
9/16/10 |
10/13/10 |
10/27/10 |
Multifamily - Non-Agency |
+360 |
+300 |
+280 |
+280 |
+280 |
Multifamily – Agency |
+220 |
+240 |
+240 |
+240 |
+250 |
Regional Mall |
+450 |
+290 |
+290 |
+280 |
+290 |
Strip/Power Center |
+460 |
+300 |
+300 |
+285 |
+295 |
Multi-Tenant Industrial |
+435 |
+280 |
+280 |
+275 |
+275 |
CBD Office |
+435 |
+270 |
+270 |
+270 |
+270 |
Suburban Office |
+465 |
300 |
+300 |
+300 |
+300 |
Full-Service Hotel |
+500 |
+400 |
+400 |
+375 |
+375 |
Limited-Service Hotel |
+500 |
+450 |
+450 |
+450 |
+450 |
5-Year Treasury |
2.60% |
1.41% |
1.51% |
1.17% |
1.14% |
Source: Cushman & Wakefield Sonnenblick Goldman. |
Property Type |
Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages |
|
1/6/10 |
8/31/10 |
9/16/10 |
10/13/10 |
10/27/10 |
Multifamily - Non-Agency |
+300 |
+180 |
+180 |
+180 |
+180 |
Multifamily – Agency |
+220 |
+190 |
+190 |
+190 |
+190 |
Regional Mall |
+350 |
+200 |
+200 |
+200 |
+200 |
Strip/Power Center |
+350 |
+210 |
+200 |
+200 |
+205 |
Multi-Tenant Industrial |
+420 |
+205 |
+200 |
+190 |
+190 |
CBD Office |
+330 |
+225 |
+190 |
+190 |
+190 |
Suburban Office |
+355 |
+225 |
+220 |
+220 |
+220 |
Full-Service Hotel |
+550 |
+350 |
+350 |
+340 |
+340 |
Limited-Service Hotel |
+575 |
+380 |
+380 |
+380 |
+380 |
10-Year Treasury |
3.85% |
2.61% |
2.76% |
2.45% |
2.71% |
Source: Cushman & Wakefield Sonnenblick Goldman. |
Property Type |
Mid-Point of Floating-Rate Commercial Mortgage Spreads For 3 - 5 Commercial Real Estate Year Mortgages |
|
1/6/10 |
8/31/10 |
9/16/10 |
10/13/10 |
10/27/10 |
Multifamily – Non-Agency |
+300 – 400 |
+275-300 |
+275-325 |
+250-300 |
+275-325 |
Multifamily- Agency |
NA |
NA |
NA |
NA |
NA |
Regional Mall |
+475 – 600 |
+275-350 |
+275-350 |
+275-350 |
+275-350 |
Strip/Power Center |
+450 – 650 |
+275-350 |
+275-350 |
+275-350 |
+275-350 |
Multi-Tenant Industrial |
+400 – 500 |
+250-350 |
+250-350 |
+250-350 |
+250-350 |
CBD Office |
+425 |
+225-300 |
+225-300 |
+225-300 |
+225-300 |
Suburban Office |
+425 |
+250-350 |
+250-350 |
+250-350 |
+250-350 |
Full-Service Hotel |
+600 |
+375-550 |
+375-500 |
+375-500 |
+375-500 |
Limited-Service Hotel |
+750 |
+450-600 |
+450-550 |
+450-600 |
+450-600 |
1-Month LIBOR |
0.23% |
0.26% |
0.26% |
0.26% |
0.26% |
3-Month LIBOR |
0.25% |
0.31% |
0.31% |
0.29% |
0.29% |
* A dash (-) indicates a range. |
Source: Cushman & Wakefield Sonnenblick Goldman. |
Year-to-Date Public Equity Capital Markets
DJIA (1): +7.33%
S & P 500 (2):+7.54%
NASDAQ (3): +10.98%
Russell 2000 (4): +13.44%
MSCI U.S. REIT (5):+20.61%
(1) Dow Jones Industrial Average. (2) Standard & Poor’s 500 Stock Index. (3) NASD Composite Index.
(4) Small Capitalization segment of U.S. equity universe. (5) Morgan Stanley REIT Index.
U.S. Treasury Yields |
|
1/6/10 |
4/9/10 |
9/30/10 |
11/12/10 |
3-Month |
.016% |
0.15% |
0.15% |
0.12% |
6-Month |
0.25% |
0.23% |
0.19% |
0.16% |
2 Year |
0.99% |
1.06% |
0.41% |
0.50% |
5 Year |
2.60% |
2.62% |
1.26% |
1.36% |
10 Year |
3.85% |
3.88% |
2.51% |
2.79% |
Source: Bloomberg LLP. |