Headlines

“Partners Tap Bank of China For New York City Trophy Loan”

The owners of two, adjacent New York City office buildings have selected the Bank of  China to originate a $400 million long-term, interest only first mortgage, the proceeds of which will be used to pay down existing construction financing provided by two international banks.

This is the third large-scale New York office building loan won by the Bank of China; the first was an $800 million loan for 245 Park Avenue (November 2010) which was followed by a $250 million loan secured by 3 Columbus Circle (aka 1775 Broadway) originated in April 2011.

Monday’s Numbers

The Trepp LLC survey showed spreads widening dramatically during the survey period (an average of 15+/- basis points) as concern about non-real estate factors such as the Federal Reserve’s activities, the Euro-financial market crises, and the a perceived increase in Sovereign risk, to name a few, weighed on lenders minds and lending strategies.

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

9/23/11

Office

342

214

237

Retail

326

207

227

Multifamily

318

188

222

Industrial

333

201

229

Average Asking Spread

330

203

228

10-Year Treasury

3.83%

3.29%

1.83%

The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ending September 30 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

8/11/11

8/24/11

9/30/11

Multifamily – Non-Agency

+270

+245

+255

+265

+250

Multifamily – Agency

+280

+250

+265

+250

+255

Regional Mall

+280

+260

+290

+290

+300

Grocery Anchored

+280

+260

+285

+285

+290

Strip and Power Centers

 

 

+300

+300

+310

Multi-Tenant Industrial

+270

+265

+295

+285

+295

CBD Office

+280

+260

+290

+290

+290

Suburban Office

+300

+270

+300

+300

+310

Full-Service Hotel

+320

+300

+320

+320

+335

Limited-Service Hotel

+400

+325

+340

+340

+345

5-Year Treasury

2.60%

2.23%

0.97%

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

8/11/11

8/24/11

9/30/11

Multifamily – Non-Agency

+190

+180

+240

+240

+240

Multifamily – Agency

+200

+185

+245

+230

+235

Regional Mall

+175

+180

+240

+255

+250

Grocery Anchor

+190

+185

+230

+250

+240

Strip and Power Centers

 

 

+250

+260

+255

Multi-Tenant Industrial

+190

+190

+240

+250

+250

CBD Office

+180

+180

+240

+255

+250

Suburban Office

+190

+190

+260

+260

+255

Full-Service Hotel

+290

+230

+275

+275

+300

Limited-Service Hotel

+330

+260

+295

+280

+325

10-Year Treasury

3.47%

3.45%

2.23%

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

8/11/11

8/24/11

9/30/11

Multifamily – Non-Agency

+250-300

+225-325

+220-260

+220-260

+225-250

Multifamily- Agency

+300

+250-310

+230-270

+230-270

+230-265

Regional Mall

+275-300

+225-300

+220-270

+220-270

+225-275

Grocery Anchored

+275-300

+225-300

+210-275

+210-275

+215-275

Strip and Power Centers

 

 

+235-300

+235-300

+225-300

Multi-Tenant Industrial

+250-350

+250-350

+250-325

+250-325

+250-325

CBD Office

+225-300

+225-300

+235-300

+235-300

+240-300

Suburban Office

+250-350

+275-350

+265-325

+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%

0.21%

0.22%

0.24%

3-Month LIBOR

0.30%

0.28%

0.29%

0.31%

0.37%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): -5.74%
S & P 500 (2):-10.04%
NASDAQ (3): -8.95%
Russell 2000 (4):-17.81%
MSCI U.S. REIT (5):-8.21%
_____
 (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

9/30/2011

3-Month

0.12%

0.02%

6-Month

0.18%

0.05%

2 Year

0.59%

0.24%

5 Year

2.01%

0.95%

10 Year

3.29%

1.92%