Headlines

“Six Banks Fail in September, Down from Seven Failures in September”

Year-to-date, 74 banks have failed, putting the U.S. banking system on track to record 100+/- failures in 2011.

Monday’s Numbers

The Trepp LLC survey narrowed a bit during the most recent survey period. Deals appear to be closing on time, on schedule, and at quoted rates. Our sources say commercial real estate mortgages are being quoted in the low 5’s to high 6’s range at maximum loan-to-value ratios of 65 percent.

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

10/7/11

Office

342

214

228

Retail

326

207

220

Multifamily

318

188

215

Industrial

333

201

220

Average Asking Spread

330

203

221

10-Year Treasury

3.83%

3.29%

2.20%

The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ending September 30th showed less volatility than the Trepp survey with 10-year fixed rate spreads hovering around 250 basis points (with the exception of hotels). Our anecdotal sense is that lender mandated floors are creeping into more and more transactions as lenders seek to protect spreads, margins, and themselves from increased volatility

Property Type

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

12/31/10

3/31/11

6/30/11

8/24/11

9/30/11

Multifamily – Non-Agency

+270

+245

+230

+265

+250

Multifamily – Agency

+280

+250

+210

+250

+255

Regional Mall

+280

+260

+265

+290

+300

Grocery Anchored

+280

+260

+250

+285

+290

Strip and Power Centers

 

 

+270

+300

+310

Multi-Tenant Industrial

+270

+265

+255

+285

+295

CBD Office

+280

+260

+255

+290

+290

Suburban Office

+300

+270

+270

+300

+310

Full-Service Hotel

+320

+300

+275

+320

+335

Limited-Service Hotel

+400

+325

+310

+340

+345

5-Year Treasury

2.60%

2.23%

1.52%

0.96%

0.99%

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

3/31/11

6/30/11

8/24/11

9/30/11

Multifamily – Non-Agency

+190

+180

+185

+240

+240

Multifamily – Agency

+200

+185

+175

+230

+235

Regional Mall

+175

+180

+190

+255

+250

Grocery Anchor

+190

+185

+200

+250

+240

Strip and Power Centers

 

 

+195

+260

+255

Multi-Tenant Industrial

+190

+190

+190

+250

+250

CBD Office

+180

+180

+190

+255

+250

Suburban Office

+190

+190

+195

+260

+255

Full-Service Hotel

+290

+230

+225

+275

+300

Limited-Service Hotel

+330

+260

+245

+280

+325

10-Year Treasury

3.47%

3.45%

2.94%

2.16%

2.01%

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

3/31/11

6/30/11

8/24/11

9/30/11

Multifamily – Non-Agency

+250-300

+225-325

+200-260

+220-260

+225-250

Multifamily- Agency

+300

+250-310

+220-260

+230-270

+230-265

Regional Mall

+275-300

+225-300

+205-270

+220-270

+225-275

Grocery Anchored

+275-300

+225-300

+205-275

+210-275

+215-275

Strip and Power Centers

 

 

+225-300

+235-300

+225-300

Multi-Tenant Industrial

+250-350

+250-350

+230-325

+250-325

+250-325

CBD Office

+225-300

+225-300

+215-300

+235-300

+240-300

Suburban Office

+250-350

+275-350

+250-325

+265-325

+265-325

Full-Service Hotel

+300-450

+350-450

+350-450

+350-450

+350-450

Limited-Service Hotel

+450-600

+400-500

+400-500

+400-500

+400-500

1-Month LIBOR

0.26%

0.22%

0.19%

0.22%

0.24%

3-Month LIBOR

0.30%

0.28%

0.25%

0.31%

0.37%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): +0.58%
S & P 500 (2):-2.63%
NASDAQ (3): +0.56%
Russell 2000 (4):-9.14%
MSCI U.S. REIT (5):-4.24%

 (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

1015/2011

3-Month

0.12%

0.01%

6-Month

0.18%

0.05%

2 Year

0.59%

0.27%

5 Year

2.01%

1.11%

10 Year

3.29%

2.25%