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.

“Trepp Reports CMBS Delinquency Rate Hits Record High of 9.2% in December”

Comment: Notwithstanding a number of improving indicators, Trepp’s report is just another way of saying we have a long way to go.

“Eight First Quarter 2011CMBS Deals in the Works”

Comment: Five multi-borrower, three single borrower deals, $13 billion in proposed issuance; Securitization 2.0 is gaining traction.

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders will be updated in next week’s edition of Monday’s Numbers.

2010 ended on a strong note with all-in 10-year mortgage spreads in 5.25%+/- range which should have proved attractive to all but the most jaded investors. But as they say, it’s still “early days” and few lenders have announced plans and targets for 2011.

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

Office

342

214

Retail

326

207

Multifamily

318

188

Industrial

333

201

Average Asking Spread

330

203

10-Year Treasury

3.83%

3.29%

Source: Commercial Mortgage Alert; Trepp.

The Cushman & Wakefield Sonnenblick-Goldman fixed and floating mortgage rate survey (below) came in a little at yearend, strengthening our conviction that lender’s are becoming more comfortable with the (real estate) world around them. That said, lender’s will continue to be cautious and vigilant and underwriting standards will remain stringent.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 5 Year Commercial Real Estate Mortgages

12/16/10

1/6/11

Multifamily – Non-Agency

+270

+250

Multifamily – Agency

+280

+260

Regional Mall

+280

+260

Strip/Power Center

+280

+265

Multi-Tenant Industrial

+270

+270

CBD Office

+280

+270

Suburban Office

+300

+300

Full-Service Hotel

+320

+320

Limited-Service Hotel

+400

+375

5-Year Treasury

2.60%

2.07%

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

Multifamily – Non-Agency

+190

+190

Multifamily – Agency

+200

+195

Regional Mall

+175

+180

Strip/Power Center

+190

+185

Multi-Tenant Industrial

+190

+190

CBD Office

+180

+180

Suburban Office

+190

+190

Full-Service Hotel

+290

+270

Limited-Service Hotel

+330

+310

10-Year Treasury

3.47%

3.38%

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

Multifamily – Non-Agency

+250-300

+225-300

Multifamily- Agency

+300

+275-300

Regional Mall

+275-300

+250-275

Strip/Power Center

+275-300

+275-300

Multi-Tenant Industrial

+250-350

+250-350

CBD Office

+225-300

+225-300

Suburban Office

+250-350

+250-300

Full-Service Hotel

+300-450

+350-450

Limited-Service Hotel

+450-600

+400-500

1-Month LIBOR

0.26%

0.26%

3-Month LIBOR

0.30%

0.30%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +1.11%
S & P 500 (2):+1.00%
NASDAQ (3): +1.82%
Russell 2000 (4): -0.18%
MSCI U.S. REIT (5):-1.02%

 (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

1/8/11

3-Month

0.12%

0.13%

6-Month

0.18%

0.17%

2 Year

0.59%

0.59%

5 Year

2.01%

1.96%

10 Year

3.29%

3.32%

Source: Bloomberg LLP.