Headlines

Headlines are normally self-explanatory; we hope the ones we publish will convey a sense of the terms and conditions present in the real estate capital markets.

“Defaults on Commercial Real Estate Mortgages Held by Banks Decline in 4Q 2010”

Comment: First drop in number of defaults since the first quarter of 2006; finally…

“NCREIF National Property Index Up 13.1% for 2010”

Comment: The NCREIF (National Council of Real Estate Investment Fiduciaries) National Property Index is comprised of 6,175 properties valued at $247.1 billion. The Index turned positive at the end of the 3rd quarter of 2010 after seven sequentially trailing 12-month periods, indicating that we have “turned the corner” in terms of fundamentals and property performance (and therefore property value).

In our next posting we will publish the returns by region and property type for the 4th quarter 2010 as well as the trailing 12-month period ending December 31, 2010.

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders remained unchanged; financing appears available at attractive rates (5.25% – 5.50%). Absent a severe “shock to the system”, rates seem likely to fluctuate within this narrow band for the foreseeable future.

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

1/28/2011

2/7/2011

2/14/2011

2/21/2011

Office

342

214

202

199

189

191

Retail

326

207

191

188

181

179

Multifamily

318

188

174

173

162

163

Industrial

333

201

186

184

178

175

 

 

 

 

 

 

Average Asking Spread

330

203

188

186

178

177

 

 

 

 

 

 

10-Year Treasury

3.83%

3.29%

3.50%

3.64%

3.63%

3.58%

Source: Commercial Mortgage Alert; Trepp.

The Cushman & Wakefield Sonnenblick-Goldman Survey showed little, if any, change over the past two weeks as all-in costs remain “attractive and acceptable” to lender and borrower alike.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 5 Year Commercial Real Estate Mortgages

12/16/10

1/6/11

1/20/11

2/3/11

2/15/11

Multifamily – Non-Agency

+270

+250

+250

+250

+250

Multifamily – Agency

+280

+260

+260

+255

+255

Regional Mall

+280

+260

+260

+260

+260

Grocery Anchored

+280

+265

+265

+265

+260

Multi-Tenant Industrial

+270

+270

+270

+270

+270

CBD Office

+280

+270

+260

+260

+260

Suburban Office

+300

+300

+270

+270

+270

Full-Service Hotel

+320

+320

+300

+300

+300

Limited-Service Hotel

+400

+375

+350

+330

+330

5-Year Treasury

2.60%

2.07%

2.05%

2.06%

2.36%

Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 10 Year Commercial Real Estate Mortgages

12/1610

1/6/11

1/20/11

2/3/11

2/15/11

Multifamily – Non-Agency

+190

+190

+190

+190

+180

Multifamily – Agency

+200

+195

+195

+200

+190

Regional Mall

+175

+180

+180

+180

+180

Grocery Anchor

+190

+185

+185

+185

+185

Multi-Tenant Industrial

+190

+190

+190

+190

+190

CBD Office

+180

+180

+180

+180

+180

Suburban Office

+190

+190

+190

+190

+190

Full-Service Hotel

+290

+270

+250

+250

+240

Limited-Service Hotel

+330

+310

+280

+260

+260

10-Year Treasury

3.47%

3.38%

3.45%

3.46%

3.63%

Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type

Mid-Point of Floating-Rate Commercial Mortgage

Spreads For 3 – 5 Commercial Real Estate Year Mortgages

12/1610

1/6/11

1/20/11

2/3/11

2/15/11

Multifamily – Non-Agency

+250-300

+225-300

+225-300

+225-300

+225-300

Multifamily- Agency

+300

+275-300

+250-300

+250-300

+250-300

Regional Mall

+275-300

+250-275

+250-275

+250-275

+250-275

Grocery Anchored

+275-300

+275-300

+275-300

+250-300

+250-300

Multi-Tenant Industrial

+250-350

+250-350

+250-350

+250-350

+250-300

CBD Office

+225-300

+225-300

+250-300

+250-300

+250-300

Suburban Office

+250-350

+250-300

+275-350

+275-350

+275-350

Full-Service Hotel

+300-450

+350-450

+350-450

+350-400

+350-450

Limited-Service Hotel

+450-600

+400-500

+400-500

+400-500

+400-500

1-Month LIBOR

0.26%

0.26%

0.26%

0.26%

0.26%

3-Month LIBOR

0.30%

0.30%

0.30%

0.31%

0.31%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +4.79%
S & P 500 (2):+4.86%
NASDAQ (3): +4.75%
Russell 2000 (4):+4.14%
MSCI U.S. REIT (5):+4.74%

 (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

2/12/2011

2/18/2011

2/26/2011

3-Month

0.12%

0.11%

0.09%

0.12%

6-Month

0.18%

0.15%

0.14%

0.15%

2 Year

0.59%

0.83%

0.75%

0.71%

5 Year

2.01%

2.36%

2.27%

2.16%

10 Year

3.29%

3.63%

3.58%

3.48%

Source: Bloomberg LLP.