The Real Estate Roundtable Sentiment Index (for Q2-2012)

  • The index showed a slight uptick compared to the prior quarter as the U.S. economy basked (finally) in some positive economic growth. Survey participants remain concerned about continuing global macroeconomic concerns and political uncertainties.
  • Respondents noted improved conditions as compared to a year ago; the majority feel this improvement will continue in the upcoming year.
  • Most survey participants reported an increase in asset values over the last year. However, more than one-third of respondents predict pricing will remain flat going forward.
  • Capital, particularly debt capital, has become increasingly available as compared to a year ago. However, participants predict continued, but slow, improvement.

Monday’s Numbers

The Trepp LLC survey showed spreads widening as much as 15 basis points for no apparent reason we know of except, possibly, the continuing crises in Europe and concerns that the U.S. will catch their flu.

Fortunately, money is plentiful with a majority of the widening of spreads offset by the lower yields on 10-year Treasury bonds.

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

5/4/12

Month Earlier

Office

342

214

210

219

212

Retail

326

207

207

209

196

Multifamily

318

188

198

201

184

Industrial

333

201

205

209

191

Average Spread

330

203

205

210

196

10-Year Treasury

3.83%

3.29%

1.88%

1.95%

2.10%

Property Type

Mid-Point of Fixed Rate Commercial Mortgage
Spreads For 5 Year Commercial Real Estate Mortgages

12/31/10

1/26/12

2/28/12

3/28/12

4/27/12

Multifamily – Non-Agency

+270

+240

+240

+230

+240

Multifamily – Agency

+280

+245

+210

+195

+200

Regional Mall

+280

+300

+300

+275

+275

Grocery Anchored

+280

+295

+290

+270

+270

Strip and Power Centers

 

+320

+315

+295

+295

Multi-Tenant Industrial

+270

+305

+310

+310

+285

CBD Office

+280

+310

+310

+295

+270

Suburban Office

+300

+320

+320

+310

+290

Full-Service Hotel

+320

+350

+350

+350

+340

Limited-Service Hotel

+400

+360

+360

+360

+350

5-Year Treasury

2.60%

0.89%

0.78%

0.83%

0.83%

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

1/26/12

2/28/12

3/28/12

4/27/12

Multifamily – Non-Agency

+190

+210

+210

+200

+210

Multifamily – Agency

+200

+205

+180

+165

+170

Regional Mall

+175

+245

+235

+275

+220

Grocery Anchor

+190

+240

+230

+270

+200

Strip and Power Centers

 

+255

+250

+290

+235

Multi-Tenant Industrial

+190

+255

+250

+280

+240

CBD Office

+180

+240

+320

+270

+220

Suburban Office

+190

+260

+250

+290

+245

Full-Service Hotel

+290

+290

+290

+325

+260

Limited-Service Hotel

+330

+315

+315

+345

+290

10-Year Treasury

3.47%

1.97%

1.90%

2.21%

1.95%

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

1/26/12

2/28/12

3/28/12

4/27/12

Multifamily – Non-Agency

+250-300

+200-250

+200-250

+200-250

+200-250

Multifamily- Agency

+300

+220-265

+220-265

+220-265

+220-265

Regional Mall

+275-300

+210-265

+200-265

+200-265

+200-265

Grocery Anchored

+275-300

+200-275

+200-275

+200-275

+200-275

Strip and Power Centers

 

+225-300

+225-300

+225-300

+225-300

Multi-Tenant Industrial

+250-350

+225-305

+225-305

+225-305

+225-305

CBD Office

+225-300

+225-300

+225-300

+225-300

+225-300

Suburban Office

+250-350

+250-325

+250-325

+250-325

+250-325

Full-Service Hotel

+300-450

+350-425

+275-400

+275-400

+250-400

Limited-Service Hotel

+450-600

+400-500

+350-550

+325-450

+325-450

1-Month LIBOR

0.26%

0.27%

0.24%

0.24%

0.24%

3-Month LIBOR

0.30%

0.55%

0.49%

0.47%

0.47%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +4.94%
S & P 500 (2): +7.62%
NASDAQ (3): +12.62%
Russell 2000 (4):+6.64%
Morgan Stanley U.S. REIT (5):+12.73%
_____
 (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

5/11/12

3-Month

0.12%

0.01%

0.09%

6-Month

0.18%

0.06%

0.14%

2 Year

0.59%

0.24%

0.26%

5 Year

2.01%

0.83%

0.75%

7 Year

 

 

1.23%

10 Year

3.29%

1.88%

1.84%

                    

Key Rates (in Percentages)

 

Current

1 Mo. Prior

3 Mo. Prior

6 Mo. Prior

1 Yr. Prior

Fed Funds Rate

0.16

0.16

0.12

0.07

0.08

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

8.10

8.20

8.30

8.90

9.00

1-Month Libor

0.24

0.24

0.25

0.25

0.20

3-Month Libor

0.47

0.47

0.51

0.46

0.26