Headlines

“Transaction Velocity (and Volume) Continues to Increase”

According to recent data from Real Capital Analytics, sales of commercial real estate properties totaled approximately $50.3 billion for the quarter ended March 31st, a decrease of approximately 18.3 percent compared to the prior quarter. The first quarter is typically the slowest quarter of the year.

The trend for sales of commercial real estate for the 12-months ended December 31, 2011, as compared to the 12-months ended March 31, 2012 is up. Sales for the 12-months ended December 31, 2011 was equal to approximately $211 billion as compared to approximately $226 billion for the period ending March 31, 2012, an increase of approximately 7.1 percent. The numbers are encouraging and represent measurable progress.

Monday’s Numbers

The Trepp LLC survey showed spreads widening over the past two weeks in response to the yield on 10-year Treasury bonds which has narrowed by about 15 basis points. Lending spreads continue to move in a narrow range with overall cost attractive at all maturities and from a wide array of capital sources. Slice it anyway you want: with floors skirting around 4.0 percent for the shortest maturity (5 years), financing remains attractive and very affordable.

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

12/31/11

4/20

Month Earlier

Office

342

214

210

205

190

Retail

326

207

207

198

174

Multifamily

318

188

198

186

159

Industrial

333

201

205

190

172

Average Spread

330

203

205

195

174

10-Year Treasury

3.83%

3.29%

1.88%

1.96%

2.23%

Over the past month, the Cushman & Wakefield Sonnenblick-Goldman Survey narrowed, with 10-year rates improving as much as 40 basis points for some property sectors.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage
Spreads For 5 Year Commercial Real Estate Mortgages

12/31/10

1/5/12

1/26/12

2/28/12

3/28/12

Multifamily – Non-Agency

+270

+245

+240

+240

+230

Multifamily – Agency

+280

+255

+245

+210

+195

Regional Mall

+280

+300

+300

+300

+275

Grocery Anchored

+280

+295

+295

+290

+270

Strip and Power Centers

+320

+320

+315

+295

Multi-Tenant Industrial

+270

+305

+310

+310

+285

CBD Office

+280

+310

+310

+295

+270

Suburban Office

+300

+320

+320

+310

+290

Full-Service Hotel

+320

+350

+350

+350

+325

Limited-Service Hotel

+400

+360

+360

+360

+335

5-Year Treasury

2.60%

0.89%

0.78%

0.83%

1.03%

Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage
Spreads For 10 Year Commercial Real Estate Mortgages

12/31/10

1/5/12

1/26/12

2/28/12

3/28/12

Multifamily – Non-Agency

+190

+205

+210

+210

+200

Multifamily – Agency

+200

+200

+205

+180

+165

Regional Mall

+175

+245

+245

+235

+275

Grocery Anchor

+190

+240

+240

+230

+270

Strip and Power Centers

+255

+255

+250

+290

Multi-Tenant Industrial

+190

+245

+255

+250

+280

CBD Office

+180

+250

+240

+320

+270

Suburban Office

+190

+265

+260

+250

+290

Full-Service Hotel

+290

+300

+290

+290

+325

Limited-Service Hotel

+330

+310

+315

+315

+345

10-Year Treasury

3.47%

2.00%

1.97%

1.90%

2.21%

Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type

Mid-Point of Floating-Rate Commercial Mortgage
Spreads For 3 – 5 Commercial Real Estate Year Mortgages

12/31/10

1/5/12

1/26/12

2/28/12

3/28/12

Multifamily – Non-Agency

+250-300

+200-250

+200-250

+200-250

+200-250

Multifamily- Agency

+300

+220-265

+220-265

+220-265

+220-265

Regional Mall

+275-300

+250-350

+210-265

+200-265

+200-265

Grocery Anchored

+275-300

+240-325

+200-275

+200-275

+200-275

Strip and Power Centers

+250-350

+225-300

+225-300

+225-300

Multi-Tenant Industrial

+250-350

+270-350

+225-305

+225-305

+225-305

CBD Office

+225-300

+275-350

+225-300

+225-300

+225-300

Suburban Office

+250-350

+300-350

+250-325

+250-325

+250-325

Full-Service Hotel

+300-450

+375-475

+350-425

+275-400

+275-400

Limited-Service Hotel

+450-600

+375-550

+400-500

+350-550

+325-450

1-Month LIBOR

0.26%

0.30%

0.27%

0.24%

0.24%

3-Month LIBOR

0.30%

0.58%

0.55%

0.49%

0.47%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +8.27%
S & P 500 (2): +11.59%
NASDAQ (3): +17.81%
Russell 2000 (4):+11.41%
Morgan Stanley U.S. REIT (5):+12.97%
_____
(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

12/31/11

4/28/12

3-Month

0.12%

0.01%

0.09%

6-Month

0.18%

0.06%

0.14%

2 Year

0.59%

0.24%

0.26%

5 Year

2.01%

0.83%

0.83%

7 Year

1.34%

10 Year

3.29%

1.88%

1.93%

Key Rates (in Percentages)

Current

1 Mo. Prior

3 Mo. Prior

6 Mo. Prior

1 Yr. Prior

Fed Funds Rate

0.14

0.15

0.08

0.07

0.10

Federal Reserve Target Rate

0.25

0.25

0.25

0.25

0.25

Prime Rate

3.25

3.25

3.25

3.25

3.25

US Unemployment Rate

8.20

8.30

8.50

9.00

8.90

1-Month Libor

0.24

0.24

0.27

0.25

0.21

3-Month Libor

0.47

0.47

0.55

0.43

0.27