Headlines
“You Can Take Interest Rates Out of the Equation for a While…a Long While”
Based on the Federal Reserve’s pronouncement this week that it would be keeping short-term interest rates at the current historical low through 2014, we should expect rates to remain at today’s levels for the next three years, baring a global financial crises. Imagine that: pro-forma financing statements with an imputed borrowing cost of five percent or even less.
Monday’s Numbers
During the survey period, the Trepp LLC survey remained at current levels, unchanged by a little as a basis point; we suspect the markets’ are holding their collective breaths, waiting for this week’s installment of Greece’s financial saga.
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 |
1/20/12 |
Month Earlier |
Office |
342 |
214 |
210 |
215 |
210 |
Retail |
326 |
207 |
207 |
211 |
207 |
Multifamily |
318 |
188 |
198 |
206 |
198 |
Industrial |
333 |
201 |
205 |
207 |
205 |
Average Spread |
330 |
203 |
205 |
210 |
205 |
10-Year Treasury |
3.83% |
3.29% |
1.88% |
2.02 |
2.05 |
The Cushman & Wakefield Sonnenblick-Goldman Survey shows rates unchanged to down five basis points. Lenders seem to be going about their business, reacting to market events as necessary.
Property Type |
Mid-Point of Fixed Rate Commercial Mortgage
Spreads For 5 Year Commercial Real Estate Mortgages |
|
12/31/10 |
1/5/12 |
1/26/12 |
Multifamily - Non-Agency |
+270 |
+245 |
+240 |
Multifamily – Agency |
+280 |
+255 |
+245 |
Regional Mall |
+280 |
+300 |
+300 |
Grocery Anchored |
+280 |
+295 |
+295 |
Strip and Power Centers |
|
+320 |
+320 |
Multi-Tenant Industrial |
+270 |
+305 |
+310 |
CBD Office |
+280 |
+310 |
+310 |
Suburban Office |
+300 |
+320 |
+320 |
Full-Service Hotel |
+320 |
+350 |
+350 |
Limited-Service Hotel |
+400 |
+360 |
+360 |
5-Year Treasury |
2.60% |
0.89% |
0.78% |
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 |
1/26/12 |
Multifamily - Non-Agency |
+190 |
+205 |
+210 |
Multifamily – Agency |
+200 |
+200 |
+205 |
Regional Mall |
+175 |
+245 |
+245 |
Grocery Anchor |
+190 |
+240 |
+240 |
Strip and Power Centers |
|
+255 |
+255 |
Multi-Tenant Industrial |
+190 |
+245 |
+255 |
CBD Office |
+180 |
+250 |
+240 |
Suburban Office |
+190 |
+265 |
+260 |
Full-Service Hotel |
+290 |
+300 |
+290 |
Limited-Service Hotel |
+330 |
+310 |
+315 |
10-Year Treasury |
3.47% |
2.00% |
1.97% |
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 |
1/26/12 |
Multifamily – Non-Agency |
+250-300 |
+200-250 |
+200-250 |
Multifamily- Agency |
+300 |
+220-265 |
+220-265 |
Regional Mall |
+275-300 |
+250-350 |
+210-265 |
Grocery Anchored |
+275-300 |
+240-325 |
+200-275 |
Strip and Power Centers |
|
+250-350 |
+225-300 |
Multi-Tenant Industrial |
+250-350 |
+270-350 |
+225-305 |
CBD Office |
+225-300 |
+275-350 |
+225-300 |
Suburban Office |
+250-350 |
+300-350 |
+250-325 |
Full-Service Hotel |
+300-450 |
+375-475 |
+350-425 |
Limited-Service Hotel |
+450-600 |
+375-550 |
+400-500 |
1-Month LIBOR |
0.26% |
0.30% |
0.27% |
3-Month LIBOR |
0.30% |
0.58% |
0.55% |
* A dash (-) indicates a range. |
Source: Cushman & Wakefield Sonnenblick Goldman. |
Year-to-Date Public Equity Capital Markets
DJIA (1): +3.63%
S & P 500 (2): +4.67%
NASDAQ (3): +8.11%
Russell 2000 (4):+7.77%
Morgan Stanley U.S. REIT (5):+6.72%
_____
(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 |
1/29/12 |
3-Month |
0.12% |
0.01% |
.05% |
6-Month |
0.18% |
0.06% |
.07% |
2 Year |
0.59% |
0.24% |
.21% |
5 Year |
2.01% |
0.83% |
.74% |
10 Year |
3.29% |
1.88% |
1.89% |