Headlines

“Pru[dential] Sees 20 Percent Increase in Commercial Mortgage Lending This Year”

While certainly a meaningful and substantial increase, this is not going to exactly move the needle for the average borrower as insurance companies by and large focus their general account’s attention on core properties, gateway cities, and “pristine” borrowers. Further, the $11.6 billion allocation is divided among a number of lending programs including: conduit lending – $750 million; agency and affordable housing – $3.1 billion; Prudential’s general account – $7.0 billion; and $750 million of miscellaneous.

Hopefully other insurance companies will follow suit and then conduit lenders will gain some traction and banks will finally be de-leveraged and voila, we will have a commercial and multifamily mortgage market again.

Monday’s Numbers

During the survey period, the Trepp LLC survey indicated spreads continued to widen five to 10 basis points.

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

2/3/12

Month Earlier

Office

342

214

210

219

213

Retail

326

207

207

214

207

Multifamily

318

188

198

206

199

Industrial

333

201

205

209

202

 

 

 

 

 

Average Spread

330

203

205

212

205

 

 

 

 

 

10-Year Treasury

3.83%

3.29%

1.88%

1.92%

1.97%

The Cushman & Wakefield Sonnenblick-Goldman Survey shows rates unchanged to down five basis points. Lenders seem to be going about their business, reacting to market events as necessary.

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

 

 

Multifamily – Non-Agency

+270

+245

+240

 

 

Multifamily – Agency

+280

+255

+245

 

 

Regional Mall

+280

+300

+300

 

 

Grocery Anchored

+280

+295

+295

 

 

Strip and Power Centers

 

+320

+320

 

 

Multi-Tenant Industrial

+270

+305

+310

 

 

CBD Office

+280

+310

+310

 

 

Suburban Office

+300

+320

+320

 

 

Full-Service Hotel

+320

+350

+350

 

 

Limited-Service Hotel

+400

+360

+360

 

 

5-Year Treasury

2.60%

0.89%

0.78%

 

 

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

 

 

Multifamily – Non-Agency

+190

+205

+210

 

 

Multifamily – Agency

+200

+200

+205

 

 

Regional Mall

+175

+245

+245

 

 

Grocery Anchor

+190

+240

+240

 

 

Strip and Power Centers

 

+255

+255

 

 

Multi-Tenant Industrial

+190

+245

+255

 

 

CBD Office

+180

+250

+240

 

 

Suburban Office

+190

+265

+260

 

 

Full-Service Hotel

+290

+300

+290

 

 

Limited-Service Hotel

+330

+310

+315

 

 

10-Year Treasury

3.47%

2.00%

1.97%

 

 

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

 

 

Multifamily – Non-Agency

+250-300

+200-250

+200-250

 

 

Multifamily- Agency

+300

+220-265

+220-265

 

 

Regional Mall

+275-300

+250-350

+210-265

 

 

Grocery Anchored

+275-300

+240-325

+200-275

 

 

Strip and Power Centers

 

+250-350

+225-300

 

 

Multi-Tenant Industrial

+250-350

+270-350

+225-305

 

 

CBD Office

+225-300

+275-350

+225-300

 

 

Suburban Office

+250-350

+300-350

+250-325

 

 

Full-Service Hotel

+300-450

+375-475

+350-425

 

 

Limited-Service Hotel

+450-600

+375-550

+400-500

 

 

1-Month LIBOR

0.26%

0.30%

0.27%

 

 

3-Month LIBOR

0.30%

0.58%

0.55%

 

 

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +4.78%
S & P 500 (2): +6.76%
NASDAQ (3): +11.47%
Russell 2000 (4):+9.78%
Morgan Stanley U.S. REIT (5):+6.64%
_____
 (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

2/11/12

3-Month

0.12%

0.01%

.08%

6-Month

0.18%

0.06%

.12%

2 Year

0.59%

0.24%

.27%

5 Year

2.01%

0.83%

.82%

10 Year

3.29%

1.88%

1.99%