European Sovereign Credit
Real estate waited for the reaction to last week’s widespread downgrade of European sovereign debt.
Equity REITs Gain in December
Equity REITs showed a total return of 4.67 percent in December and a full year return of 8.29 percent. The best performing sectors in December were manufactured homes (+7.11 percent) and timber (+6.93 percent). The worst performing sectors in December were free standing retail (+1.46 percent) and self-storage (+2.74%).
On an annual basis, the best performing sectors were self-storage (+35.22 percent) and manufactured homes (+20.38 percent).
Average dividend yield as of December 31, 2011 was 3.83 percent.
Monday’s Numbers
The Trepp LLC survey showed little, if any, change from year-end levels. Hey, they’ve only been back for two weeks!
| 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) |
| |
12/31/09 |
12/31/10 |
12/31/11 |
1/6/12 |
Month Earlier |
| Office |
342 |
214 |
210 |
213 |
206 |
| Retail |
326 |
207 |
207 |
207 |
206 |
| Multifamily |
318 |
188 |
198 |
199 |
196 |
| Industrial |
333 |
201 |
205 |
202 |
201 |
| |
|
|
|
|
|
| Average Spread |
330 |
203 |
205 |
205 |
202 |
| |
|
|
|
|
|
| 10-Year Treasury |
3.83% |
3.29% |
1.88% |
1.88% |
2.03% |
The Cushman & Wakefield Sonnenblick-Goldman Survey shows rates “coming in” maybe five basis points.
| Property Type |
Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages |
| |
12/31/10 |
1/5/12 |
|
|
|
| Multifamily - Non-Agency |
+270 |
+245 |
|
|
|
| Multifamily – Agency |
+280 |
+255 |
|
|
|
| Regional Mall |
+280 |
+300 |
|
|
|
| Grocery Anchored |
+280 |
+295 |
|
|
|
| Strip and Power Centers |
|
+320 |
|
|
|
| Multi-Tenant Industrial |
+270 |
+305 |
|
|
|
| CBD Office |
+280 |
+310 |
|
|
|
| Suburban Office |
+300 |
+320 |
|
|
|
| Full-Service Hotel |
+320 |
+350 |
|
|
|
| Limited-Service Hotel |
+400 |
+360 |
|
|
|
| 5-Year Treasury |
2.60% |
0.89% |
|
|
|
| Source: Cushman & Wakefield Sonnenblick Goldman. |
| Property Type |
Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages |
| |
12/31/10 |
1/5/12 |
|
|
|
| Multifamily - Non-Agency |
+190 |
+205 |
|
|
|
| Multifamily – Agency |
+200 |
+200 |
|
|
|
| Regional Mall |
+175 |
+245 |
|
|
|
| Grocery Anchor |
+190 |
+240 |
|
|
|
| Strip and Power Centers |
|
+255 |
|
|
|
| Multi-Tenant Industrial |
+190 |
+245 |
|
|
|
| CBD Office |
+180 |
+250 |
|
|
|
| Suburban Office |
+190 |
+265 |
|
|
|
| Full-Service Hotel |
+290 |
+300 |
|
|
|
| Limited-Service Hotel |
+330 |
+310 |
|
|
|
| 10-Year Treasury |
3.47% |
2.00% |
|
|
|
| Source: Cushman & Wakefield Sonnenblick Goldman. |
| Property Type |
Mid-Point of Floating-Rate Commercial Mortgage Spreads For 3 - 5 Commercial Real Estate Year Mortgages |
| |
12/31/10 |
1/5/12 |
|
|
|
| Multifamily – Non-Agency |
+250-300 |
+200-250 |
|
|
|
| Multifamily- Agency |
+300 |
+220-265 |
|
|
|
| Regional Mall |
+275-300 |
+250-350 |
|
|
|
| Grocery Anchored |
+275-300 |
+240-325 |
|
|
|
| Strip and Power Centers |
|
+250-350 |
|
|
|
| Multi-Tenant Industrial |
+250-350 |
+270-350 |
|
|
|
| CBD Office |
+225-300 |
+275-350 |
|
|
|
| Suburban Office |
+250-350 |
+300-350 |
|
|
|
| Full-Service Hotel |
+300-450 |
+375-475 |
|
|
|
| Limited-Service Hotel |
+450-600 |
+375-550 |
|
|
|
| 1-Month LIBOR |
0.26% |
0.30% |
|
|
|
| 3-Month LIBOR |
0.30% |
0.58% |
|
|
|
| * A dash (-) indicates a range. |
| Source: Cushman & Wakefield Sonnenblick Goldman. |
Year-to-Date Public Equity Capital Markets
DJIA (1): +1.67%
S & P 500 (2): +2.50%
NASDAQ (3): +4.05%
Russell 2000 (4):+3.15%
Morgan Stanley U.S. REIT (5):+0.64%
_____
(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 |
| |
12/31/10 |
12/31/11 |
1/13/12 |
| 3-Month |
0.12% |
0.01% |
.02% |
| 6-Month |
0.18% |
0.06% |
.05% |
| 2 Year |
0.59% |
0.24% |
.22% |
| 5 Year |
2.01% |
0.83% |
.79% |
| 10 Year |
3.29% |
1.88% |
1.86% |
Urban Land Institute