Headlines


“Slowdown Saps 4th-Quarter CMBS Pipeline”

Volatility in the bond markets, gaping spreads, and increased origination costs are playing havoc with conduits, forcing many, if not all, to the sidelines. Lenders are invoking MAC (material adverse change) clauses and increasing spreads; borrowers are weighing their options i.e., talking with non-conduit lenders.

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders showed spreads widening 15+/- basis points week-over-week and 35 to 50 basis points wider than at the beginning of the month.  Everyone seems to be in a holding pattern, afraid to pull the trigger so to speak and get caught on the wrong side of a transaction  having a 5 year or longer maturity. Our recommendation: wait out the days till Labor Day at the beach!

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

8/12/11

Office

342

214

217

Retail

326

207

209

Multifamily

318

188

197

Industrial

333

201

206

Average Asking Spread

330

203

207

10-Year Treasury

3.83%

3.29%

2.25%

The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ended August 11th showed fixed rate spreads widening as much as 40, repeat, 40 basis points while floating rate spreads widened by 20 basis points at the low end of the range.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 5 Year Commercial Real Estate Mortgages

12/16/10

3/31/11

7/7/11

7/28/11

8/11/11

Multifamily – Non-Agency

+270

+245

+230

+250

+255

Multifamily – Agency

+280

+250

+220

+240

+265

Regional Mall

+280

+260

+265

+280

+290

Grocery Anchored

+280

+260

+250

+270

+285

Strip and Power Centers

 

 

+270

+290

+300

Multi-Tenant Industrial

+270

+265

+260

+275

+295

CBD Office

+280

+260

+260

+275

+290

Suburban Office

+300

+270

+270

+295

+300

Full-Service Hotel

+320

+300

+285

+2300

+320

Limited-Service Hotel

+400

+325

+310

+320

+340

5-Year Treasury

2.60%

2.23%

1.64%

1.49%

0.97%

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

7/7/11

7/28/11

8/11/11

Multifamily – Non-Agency

+190

+180

+185

+195

+240

Multifamily – Agency

+200

+185

+180

+190

+245

Regional Mall

+175

+180

+190

+205

+240

Grocery Anchor

+190

+185

+200

+195

+230

Strip and Power Centers

 

 

+195

+210

+250

Multi-Tenant Industrial

+190

+190

+190

+230

+240

CBD Office

+180

+180

+190

+225

+240

Suburban Office

+190

+190

+195

+235

+260

Full-Service Hotel

+290

+230

+235

+250

+275

Limited-Service Hotel

+330

+260

+250

+270

+295

10-Year Treasury

3.47%

3.45%

3.09%

2.97%

2.23%

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

7/7/11

7/28/11

8/11/11

Multifamily – Non-Agency

+250-300

+225-325

+200-250

+200-250

+220-260

Multifamily- Agency

+300

+250-310

+220-260

+220-260

+230-270

Regional Mall

+275-300

+225-300

+205-270

+205-270

+220-270

Grocery Anchored

+275-300

+225-300

+205-275

+205-275

+210-275

Strip and Power Centers

 

 

+225-300

+225-300

+235-300

Multi-Tenant Industrial

+250-350

+250-350

+230-325

+230-325

+250-325

CBD Office

+225-300

+225-300

+215-300

+225-300

+235-300

Suburban Office

+250-350

+275-350

+250-325

+250-325

+265-325

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%

0.19%

0.19%

0.21%

3-Month LIBOR

0.30%

0.28%

0.25%

0.25%

0.29%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): -6.56%
S & P 500 (2):-10.66%
NASDAQ (3): -11.72%
Russell 2000 (4):-16.84%
MSCI U.S. REIT (5):-4.55%

 (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

8/19/2011

3-Month

0.12%

0.00%

6-Month

0.18%

0.02%

2 Year

0.59%

0.19%

5 Year

2.01%

0.89%

10 Year

3.29%

2.07%