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.

“J.P. Morgan Chase Prices Commercial Mortgage-Backed Securities Transaction”

J.P. Morgan Chase priced an approximately $1.5 billion commercial mortgage-backed securities offering on March 1st.  The offering was comprised of the following property types: 63% retail; 25% office; hotel 6%; manufactured housing 3%; self-storage 2%; industrial 1%; and multifamily (less than 1%).

Take-a-way: the CMBS market continues to gain traction.

“CMBS Delinquencies Reach 8.8%”

We will detail delinquencies by property type later in the week. We expect delinquencies to reach 10% before starting to decline later in the year.

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

2/7/2011

2/14/2011

2/21/2011

2/28/2011

Office

342

214

199

189

191

188

Retail

326

207

188

181

179

177

Multifamily

318

188

173

162

163

159

Industrial

333

201

184

178

175

173

Average Asking Spread

330

203

186

178

177

174

10-Year Treasury

3.83%

3.29%

3.64%

3.63%

3.58%

3.48%

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): +4.79%
S & P 500 (2):+4.96%
NASDAQ (3): +4.89%
Russell 2000 (4):+4.78%
MSCI U.S. REIT (5):+3.43%

 (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

2/18/2011

2/26/2011

3/4/2011

3-Month

0.12%

0.09%

0.12%

0.11%

6-Month

0.18%

0.14%

0.15%

0.15%

2 Year

0.59%

0.75%

0.71%

0.68%

5 Year

2.01%

2.27%

2.16%

2.18%

10 Year

3.29%

3.58%

3.48%

3.49%

Source: Bloomberg LLP.