Headlines

Happy July 4th!

“Nearly Half of Commercial Mortgages that Mature in 2011 are Underwater”

According to Trepp LLC, approximately one-half of the $346 billion of commercial real estate mortgages that will mature this year have outstanding principal balances greater than the value of the property serving as collateral for the mortgage; scary isn’t it!

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders widened a bit (I know, not very precise, but it was only three basis points). Range bound around the 5.00 percent level is not a bad place to be.

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

6/24/11

Office

342

214

185

Retail

326

207

178

Multifamily

318

188

169

Industrial

333

201

174

Average Asking Spread

330

203

177

10-Year Treasury

3.83%

3.29%

2.86%

The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ended June 16 showed fixed rate spreads widening maybe 10 basis points and floating rate spreads narrowing maybe 5 basis points. So…financing remains available at attractive and affordable rates.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 5 Year Commercial Real Estate Mortgages

12/16/10

3/31/11

5/12/11

6/2/11

6/16/11

Multifamily – Non-Agency

+270

+245

+225

+225

+230

Multifamily – Agency

+280

+250

+200

+200

+210

Regional Mall

+280

+260

+255

+255

+265

Grocery Anchored

+280

+260

+245

+245

+250

Strip and Power Centers

 

 

+265

+265

+270

Multi-Tenant Industrial

+270

+265

+245

+245

+255

CBD Office

+280

+260

+250

+250

+255

Suburban Office

+300

+270

+260

+260

+270

Full-Service Hotel

+320

+300

+275

+265

+275

Limited-Service Hotel

+400

+325

+320

+300

+310

5-Year Treasury

2.60%

2.23%

1.88%

1.62%

1.52%

Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 10 Year Commercial Real Estate Mortgages

12/1610

3/31/11

5/12/11

6/2/11

6/16/11

Multifamily – Non-Agency

+190

+180

+180

+180

+185

Multifamily – Agency

+200

+185

+175

+170

+175

Regional Mall

+175

+180

+180

+180

+190

Grocery Anchor

+190

+185

+175

+175

+200

Strip and Power Centers

 

 

+190

+190

+195

Multi-Tenant Industrial

+190

+190

+185

+185

+190

CBD Office

+180

+180

+180

+180

+190

Suburban Office

+190

+190

+190

+190

+195

Full-Service Hotel

+290

+230

+220

+220

+225

Limited-Service Hotel

+330

+260

+240

+240

+245

10-Year Treasury

3.47%

3.45%

3.22%

2.99%

2.94%

Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type

Mid-Point of Floating-Rate Commercial Mortgage

Spreads For 3 – 5 Commercial Real Estate Year Mortgages

12/16/10

3/31/11

5/12/11

6/2/11

6/16/11

Multifamily – Non-Agency

+250-300

+225-325

+205-300

+200-275

+200-260

Multifamily- Agency

+300

+250-310

+225-310

+220-270

+220-260

Regional Mall

+275-300

+225-300

+200-275

+205-275

+205-270

Grocery Anchored

+275-300

+225-300

+210-285

+215-285

+205-275

Strip and Power Centers

 

 

+230-300

+235-300

+225-300

Multi-Tenant Industrial

+250-350

+250-350

+235-325

+230-325

+230-325

CBD Office

+225-300

+225-300

+225-300

+215-300

+215-300

Suburban Office

+250-350

+275-350

+250-350

+250-325

+250-325

Full-Service Hotel

+300-450

+350-450

+350-450

+350-450

+350-450

Limited-Service Hotel

+450-600

+400-500

+400-500

+400-500

+400-500

1-Month LIBOR

0.26%

0.22%

0.20%

0.19%

0.19%

3-Month LIBOR

0.30%

0.28%

0.26%

0.25%

0.25%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +8.68%
S & P 500 (2):+6.52%
NASDAQ (3): +6.15%
Russell 2000 (4):+7.18%
MSCI U.S. REIT (5):+10.38%

 (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

7/1/2011

3-Month

0.12%

0.02%

6-Month

0.18%

0.10%

2 Year

0.59%

0.47%

5 Year

2.01%

1.78%

10 Year

3.29%

3.18%