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.

“Real Estate Industry Sets Clocks Forward 24 Hours!”

Comment: No comment required.

“Fund Acquires Office Complex, Assumes Modified Commercial Mortgage-Backed Securities Loan”

Comment: This is the first time we’ve seen a CMBS loan modified (in this case, the term was extended). What this tells us is that servicers appear willing to work with credible buyers to make deals work, including modifying loan terms, thereby improving the prospects for deals getting done.

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders narrowed slightly week-over-week with financing available at attractive rates (5.25%+/-).

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

2/14/2011

2/21/2011

2/28/2011

3/5/2011

Office

342

214

189

191

188

183

Retail

326

207

181

179

177

175

Multifamily

318

188

162

163

159

159

Industrial

333

201

178

175

173

171

Average Asking Spread

330

203

178

177

174

172

10-Year Treasury

3.83%

3.29%

3.63%

3.58%

3.48%

3.49%

Source: Commercial Mortgage Alert; Trepp.

The Cushman & Wakefield Sonnenblick-Goldman Survey came in slightly over the past two weeks; we expect rates to remain at these levels baring a “shock” to the system for the foreseeable future.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 5 Year Commercial Real Estate Mortgages

12/16/10

1/20/11

2/3/11

2/15/11

3/2/11

Multifamily – Non-Agency

+270

+250

+250

+250

+245

Multifamily – Agency

+280

+260

+255

+255

+250

Regional Mall

+280

+260

+260

+260

+260

Grocery Anchored

+280

+265

+265

+260

+260

Multi-Tenant Industrial

+270

+270

+270

+270

+265

CBD Office

+280

+260

+260

+260

+260

Suburban Office

+300

+270

+270

+270

+270

Full-Service Hotel

+320

+300

+300

+300

+300

Limited-Service Hotel

+400

+350

+330

+330

+325

5-Year Treasury

2.60%

2.05%

2.06%

2.36%

2.17%

Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 10 Year Commercial Real Estate Mortgages

12/1610

1/20/11

2/3/11

2/15/11

3/2/11

Multifamily – Non-Agency

+190

+190

+190

+180

+180

Multifamily – Agency

+200

+195

+200

+190

+185

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

+250

+250

+240

+230

Limited-Service Hotel

+330

+280

+260

+260

+260

10-Year Treasury

3.47%

3.45%

3.46%

3.63%

3.47%

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

1/20/11

2/3/11

2/15/11

3/2/11

Multifamily – Non-Agency

+250-300

+225-300

+225-300

+225-300

+225-300

Multifamily- Agency

+300

+250-300

+250-300

+250-300

+250-300

Regional Mall

+275-300

+250-275

+250-275

+250-275

+225-275

Grocery Anchored

+275-300

+275-300

+250-300

+250-300

+225-275

Multi-Tenant Industrial

+250-350

+250-350

+250-350

+250-300

+250-350

CBD Office

+225-300

+250-300

+250-300

+250-300

+225-300

Suburban Office

+250-350

+275-350

+275-350

+275-350

+275-350

Full-Service Hotel

+300-450

+350-450

+350-400

+350-450

+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%

0.31%

0.31%

0.31%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +4.04%
S & P 500 (2):+3.62%
NASDAQ (3): +2.29%
Russell 2000 (4):+1.69%
MSCI U.S. REIT (5):+3.46%

 (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

2/26/2011

3/4/2011

3/12/2011

3-Month

0.12%

0.12%

0.11%

0.07%

6-Month

0.18%

0.15%

0.15%

0.13%

2 Year

0.59%

0.71%

0.68%

0.64%

5 Year

2.01%

2.16%

2.18%

2.06%

10 Year

3.29%

3.48%

3.49%

3.40%

Source: Bloomberg LLP.