Headlines

“By the Numbers”

$38.4 billion – Life company commercial real estate lending activity in 2010, nearly double the 2009 total.

5.7 percent – Year-over-year gain in U.S. hotel occupancy during the first quarter 2011.

Source: The Institutional Real Estate letter, North America; the American Council of Life Insurers; Smith Travel research.

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders “took a licking” as spreads widened in many sectors of the debt capital markets. Regardless, all-in costs remain in the 5.00+/- percent range and should be range bound for the foreseeable future, subject to a “Black Swan” event (which is not too hard to imagine if one just looks at the newspaper each morning).

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

6/3/11

Office

342

214

187

Retail

326

207

178

Multifamily

318

188

164

Industrial

333

201

174

Average Asking Spread

330

203

176

10-Year Treasury

3.83%

3.29%

3.07%

The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ended June 2 showed floating rate spreads narrowing maybe 5 basis points with fixed rate spreads basically unchanged. Clearly, 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

4/28/11

5/12/11

6/2/11

Multifamily – Non-Agency

+270

+245

+230

+225

+225

Multifamily – Agency

+280

+250

+205

+200

+200

Regional Mall

+280

+260

+260

+255

+255

Grocery Anchored

+280

+260

+245

+245

+245

Strip and Power Centers

 

 

 

+265

+265

Multi-Tenant Industrial

+270

+265

+245

+245

+245

CBD Office

+280

+260

+250

+250

+250

Suburban Office

+300

+270

+260

+260

+260

Full-Service Hotel

+320

+300

+280

+275

+265

Limited-Service Hotel

+400

+325

+320

+320

+300

5-Year Treasury

2.60%

2.23%

2.05%

1.88%

1.62%

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

4/12/11

5/12/11

6/2/11

Multifamily – Non-Agency

+190

+180

+180

+180

+180

Multifamily – Agency

+200

+185

+185

+175

+170

Regional Mall

+175

+180

+180

+180

+180

Grocery Anchor

+190

+185

+181

+175

+175

Strip and Power Centers

 

 

 

+190

+190

Multi-Tenant Industrial

+190

+190

+190

+185

+185

CBD Office

+180

+180

+180

+180

+180

Suburban Office

+190

+190

+190

+190

+190

Full-Service Hotel

+290

+230

+230

+220

+220

Limited-Service Hotel

+330

+260

+240

+240

+240

10-Year Treasury

3.47%

3.45%

3.51%

3.22%

2.99%

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

4/12/11

4/28/11

5/12/11

6/2/11

Multifamily – Non-Agency

+250-300

+225-325

+225-315

+205-300

+200-275

Multifamily- Agency

+300

+250-310

+250-310

+225-310

+220-270

Regional Mall

+275-300

+225-300

+225-300

+200-275

+205-275

Grocery Anchored

+275-300

+225-300

+225-300

+210-285

+215-285

Strip and Power Centers

 

 

 

+230-300

+235-300

Multi-Tenant Industrial

+250-350

+250-350

+250-350

+235-325

+230-325

CBD Office

+225-300

+225-300

+225-300

+225-300

+215-300

Suburban Office

+250-350

+275-350

+250-350

+250-350

+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%

0.21%

0.20%

0.19%

3-Month LIBOR

0.30%

0.28%

0.27%

0.26%

0.25%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +3.2%
S & P 500 (2):+1.06%
NASDAQ (3): -0.34%
Russell 2000 (4):-0.52%
MSCI U.S. REIT (5):+4.29%

 (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

6/11/2011

3-Month

0.12%

0.04%

6-Month

0.18%

0.10%

2 Year

0.59%

0.40%

5 Year

2.01%

1.56%

10 Year

3.29%

2.97%