Headlines

“Bank Failures in August Decline”

According to Trepp LLC, seven banks failed in August as compared to 13 in July; total failures in 2011 have reached 68, putting the U.S. on track to record 100+/- failures this year.

Georgia leads the nation in bank failures this year (17) and in the current cycle (beginning in mid-207) with 69. Florida ranks second with 10 failures year-to-date and 55 in the current cycle.

“Equity REITs Performance Negative in August”

According to the FTSE NAREIT Equity REIT Index, equity REITs posted total returns of -5.60 percent in August as compared to +1.05 percent in July. Year-to-date, equity REITs are down 5.53 percent. Dividends for the August period averaged 3.65 percent.

Winners in August: free standing retail (+5.07 percent), manufactured homes (+3.86 percent), and self-storage (+2.87 percent).

Losers in August: hotels (-23.50 percent), industrial (-21.23 percent), and office (-7.43 percent).

CMBS 2.0 Conduit Spreads as of August 31, 2011

Fixed Rate

Priced as Spread over

August 31

3 Months Earlier

6 Months Earlier

AAA (5 Year)

10-Year Swaps

186

122

112

AAA (10-Year)

10-Year Swaps

211

153

140

AA (10-Year)

10-Year Swaps

337

231

215

A (10 Year)

10-Year Swaps

419

280

258

BBB (10-Year)

10-Year Treasury

651

395

368

BBB- (10 Year)

10-Year Treasury

659

403

373

Benchmarks as of August 31st: 10-year Treasury Bonds = 2.232%; 10-year Interest Rate Swaps = 2.412%

Source: Trepp LLC.

 

Monday’s Numbers
The Trepp LLC survey showed spreads basically unchanged, reflecting a wait (until after Labor Day) and see attitude. So, we will wait to see what if anything happened during the first weeks of September.

 

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

9/2/11

Office

342

214

221

Retail

326

207

211

Multifamily

318

188

205

Industrial

333

201

210

Average Asking Spread

330

203

207

10-Year Treasury

3.83%

3.29%

2.25%

We expect the Cushman & Wakefield Sonnenblick-Goldman Survey will be updated next week.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 5 Year Commercial Real Estate Mortgages

12/16/10

3/31/11

7/28/11

8/11/11

8/24/11

Multifamily – Non-Agency

+270

+245

+250

+255

+265

Multifamily – Agency

+280

+250

+240

+265

+250

Regional Mall

+280

+260

+280

+290

+290

Grocery Anchored

+280

+260

+270

+285

+285

Strip and Power Centers

 

 

+290

+300

+300

Multi-Tenant Industrial

+270

+265

+275

+295

+285

CBD Office

+280

+260

+275

+290

+290

Suburban Office

+300

+270

+295

+300

+300

Full-Service Hotel

+320

+300

+230

+320

+320

Limited-Service Hotel

+400

+325

+320

+340

+340

5-Year Treasury

2.60%

2.23%

1.49%

0.97%

0.96%

Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type

Mid-Point of Fixed Rate Commercial Mortgage

Spreads For 10 Year Commercial Real Estate Mortgages

12/1610

3/31/11

7/28/11

8/11/11

8/24/11

Multifamily – Non-Agency

+190

+180

+195

+240

+240

Multifamily – Agency

+200

+185

+190

+245

+230

Regional Mall

+175

+180

+205

+240

+255

Grocery Anchor

+190

+185

+195

+230

+250

Strip and Power Centers

 

 

+210

+250

+260

Multi-Tenant Industrial

+190

+190

+230

+240

+250

CBD Office

+180

+180

+225

+240

+255

Suburban Office

+190

+190

+235

+260

+260

Full-Service Hotel

+290

+230

+250

+275

+275

Limited-Service Hotel

+330

+260

+270

+295

+280

10-Year Treasury

3.47%

3.45%

2.97%

2.23%

2.16%

Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type

Mid-Point of Floating-Rate Commercial Mortgage

Spreads For 3 – 5 Commercial Real Estate Year Mortgages

12/16/10

3/31/11

8/11/11

7/28/11

824/11

Multifamily – Non-Agency

+250-300

+225-325

+220-260

+200-250

+220-260

Multifamily- Agency

+300

+250-310

+230-270

+220-260

+230-270

Regional Mall

+275-300

+225-300

+220-270

+205-270

+220-270

Grocery Anchored

+275-300

+225-300

+210-275

+205-275

+210-275

Strip and Power Centers

 

 

+235-300

+225-300

+235-300

Multi-Tenant Industrial

+250-350

+250-350

+250-325

+230-325

+250-325

CBD Office

+225-300

+225-300

+235-300

+225-300

+235-300

Suburban Office

+250-350

+275-350

+265-325

+250-325

+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%

0.19%

0.22%

3-Month LIBOR

0.30%

0.28%

0.29%

0.25%

0.31%

* A dash (-) indicates a range.

Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA (1): -5.06%
S & P 500 (2):-8.22%
NASDAQ (3): -6.97%
Russell 2000 (4):-13.91%
MSCI U.S. REIT (5):-1.32%

 (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

9/10/2011

3-Month

0.12%

0.01%

6-Month

0.18%

0.04%

2 Year

0.59%

0.17%

5 Year

2.01%

0.80%

10 Year

3.29%

1.92%