Headlines

“Loan Written at Market’s Peak Gets Three More Years”

The Problem: The original loan, written in 2007 at the market’s peak, was secured by a shopping center and then included in a securitization. Today, property net operating income is insufficient to service the interest only first mortgage as well as mezzanine debt behind the senior CMBS debt.

The Solution: The loan’s maturity was extended to April 2015, requiring interest-only debt service payments at a coupon rate of 4.75 percent, with interest accruing at the loan’s original 6.37 percent rate. Any excess property cash flow will be used to reduce the mortgage principal as well as accrued interest.

Barclays Capital estimates that as much as 70 percent of the CMBS loans written in 2007 and maturing this year will not be able to be refinanced “easily.”

Monday’s Numbers

The Trepp LLC survey showed spreads widening as many as 8 basis points, possibly in response to continued events in the Euro-zone.

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

1/13/12

Month Earlier

Office

342

214

210

215

222

Retail

326

207

207

211

217

Multifamily

318

188

198

206

210

Industrial

333

201

205

207

212

Average Spread

330

203

205

210

215

10-Year Treasury

3.83%

3.29%

1.88%

1.86%

2.09%

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): +4.12%
S & P 500 (2): +4.59%
NASDAQ (3): +6.97%
Russell 2000 (4):+5.91%
Morgan Stanley U.S. REIT (5):+3.29%
_____
 (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

1/21/12

3-Month

0.12%

0.01%

.04%

6-Month

0.18%

0.06%

.06%

2 Year

0.59%

0.24%

.24%

5 Year

2.01%

0.83%

.89%

10 Year

3.29%

1.88%

2.02%

Urban Land Institute