European Sovereign Credit

Real estate waited for the reaction to last week’s widespread downgrade of European sovereign debt.

Equity REITs Gain in December

Equity REITs showed a total return of 4.67 percent in December and a full year return of 8.29 percent. The best performing sectors in December were manufactured homes (+7.11 percent) and timber (+6.93 percent). The worst performing sectors in December were free standing retail (+1.46 percent) and self-storage (+2.74%).

On an annual basis, the best performing sectors were self-storage (+35.22 percent) and manufactured homes (+20.38 percent).

Average dividend yield as of December 31, 2011 was 3.83 percent.

Monday’s Numbers

The Trepp LLC survey showed little, if any, change from year-end levels. Hey, they’ve only been back for two weeks! 

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

1/6/12

Month Earlier

Office

342

214

210

213

206

Retail

326

207

207

207

206

Multifamily

318

188

198

199

196

Industrial

333

201

205

202

201

 

 

 

 

 

 

Average Spread

330

203

205

205

202

 

 

 

 

 

 

10-Year Treasury

3.83%

3.29%

1.88%

1.88%

2.03%

The Cushman & Wakefield Sonnenblick-Goldman Survey shows rates “coming in” maybe five basis points. 

 

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 5 Year Commercial Real Estate Mortgages

 

12/31/10

1/5/12

 

 

 

Multifamily – Non-Agency

+270

+245

 

 

 

Multifamily – Agency

+280

+255

 

 

 

Regional Mall

+280

+300

 

 

 

Grocery Anchored

+280

+295

 

 

 

Strip and Power Centers

 

+320

 

 

 

Multi-Tenant Industrial

+270

+305

 

 

 

CBD Office

+280

+310

 

 

 

Suburban Office

+300

+320

 

 

 

Full-Service Hotel

+320

+350

 

 

 

Limited-Service Hotel

+400

+360

 

 

 

5-Year Treasury

2.60%

0.89%

 

 

 

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

 

 

 

Multifamily – Non-Agency

+190

+205

 

 

 

Multifamily – Agency

+200

+200

 

 

 

Regional Mall

+175

+245

 

 

 

Grocery Anchor

+190

+240

 

 

 

Strip and Power Centers

 

+255

 

 

 

Multi-Tenant Industrial

+190

+245

 

 

 

CBD Office

+180

+250

 

 

 

Suburban Office

+190

+265

 

 

 

Full-Service Hotel

+290

+300

 

 

 

Limited-Service Hotel

+330

+310

 

 

 

10-Year Treasury

3.47%

2.00%

 

 

 

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

 

 

 

Multifamily – Non-Agency

+250-300

+200-250

 

 

 

Multifamily- Agency

+300

+220-265

 

 

 

Regional Mall

+275-300

+250-350

 

 

 

Grocery Anchored

+275-300

+240-325

 

 

 

Strip and Power Centers

 

+250-350

 

 

 

Multi-Tenant Industrial

+250-350

+270-350

 

 

 

CBD Office

+225-300

+275-350

 

 

 

Suburban Office

+250-350

+300-350

 

 

 

Full-Service Hotel

+300-450

+375-475

 

 

 

Limited-Service Hotel

+450-600

+375-550

 

 

 

1-Month LIBOR

0.26%

0.30%

 

 

 

3-Month LIBOR

0.30%

0.58%

 

 

 

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +1.67%
S & P 500 (2): +2.50%
NASDAQ (3): +4.05%
Russell 2000 (4):+3.15%
Morgan Stanley U.S. REIT (5):+0.64%
_____
 (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

1/13/12

3-Month

0.12%

0.01%

.02%

6-Month

0.18%

0.06%

.05%

2 Year

0.59%

0.24%

.22%

5 Year

2.01%

0.83%

.79%

10 Year

3.29%

1.88%

1.86%

Urban Land Institute