Headlines

“All-in-All, a Very Quiet Week”

The past week was very quiet; volatile as usual, but very quiet. There was little to report: some deals funded; some properties were turned over to their special services; some deals went under contract; some fell out of contract; and some closed. Rates were basically unchanged as the capital markets continue to try and rationalize what is happening in the Euro-capital markets in general, and in Greece, specifically.

Equity REITs had a good January, with the NAREIT Equity REIT Index up 6.36% and the dividend yield at 3.40 percent, which is very attractive on a relative basis. Top performers were: hotels (+10.87 percent) and industrial (+10.39 percent). The worst performing sectors were: multifamily (-3.91 percent) and self-storage (-4.46 percent).

On the lending side, Fitch reported  CMBS delinquencies (loans that are delinquent at least 60 days or in foreclosure) for Fitch-rated transactions equaled 8.32 percent of outstanding balances, down 5 basis points since December 31, 2011 and 27 basis points since January 31, 2011.

The worst performing sectors were: multifamily (12.77 percent delinquent, followed by hotel (12.21 percent) and industrial (10.40 percent).

Monday’s Numbers

During the survey period, the Trepp LLC survey indicated spreads unchanged during the reporting period..

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

2/10/12

Month Earlier

Office

342

214

210

218

215

Retail

326

207

207

213

211

Multifamily

318

188

198

206

206

Industrial

333

201

205

209

207

 

 

 

 

 

Average Spread

330

203

205

212

209

 

 

 

 

 

10-Year Treasury

3.83%

3.29%

1.88%

1.99%

1.88%

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): +6.00%
S & P 500 (2): +8.24%
NASDAQ (3): +13.31%
Russell 2000 (4):+11.86%
Morgan Stanley U.S. REIT (5):+7.07%
_____
 (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

2/18/12

3-Month

0.12%

0.01%

.08%

6-Month

0.18%

0.06%

.11%

2 Year

0.59%

0.24%

.29%

5 Year

2.01%

0.83%

.86%

10 Year

3.29%

1.88%

2.00%

Key Rates (in Percentages)

 

Current

1 Mo. Prior

3 Mo. Prior

6 Mo. Prior

1 Yr. Prior

Fed Funds Rate

0.11

0.07

0.08

0.12

0.16

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

8.30

8.50

8.90

9.10

9.10

1-Month Libor

0.25

0.28

.025

.021

0.26

3-Month Libor

0.49

0.56

0.48

0.30

0.31