Headlines

“None Worth Mentioning”

For real estate, it was just another week; properties were bought and sold, financed and refinanced. Against this background, the news of the week was the Euro-crises and its extension from solely country (Sovereign) risk to questions about the solvency of Euro-banks and other financial institutions.

Against this backdrop, one wonders why the indices were only down between 5.0 percent and 9.0 percent; it could have been a rout!

In case you’re interested (or just a glutton for punishment), the damage was widespread:

Dow Jones Industrial Average: -6.41 percent
NASDAQ Composite: -5.30 percent
S & P 500 Index: -6.54 percent
NYSE Index: -7.86 percent
AMEX Index: -7.79 percent
Russell 2000: -8.65 percent
Morgan Stanley REIT Index: -8.88 percent

Monday’s Numbers

The Trepp LLC survey showed spreads continuing at current levels as everyone appears focused on an array of non-real estate factors and events such as the Federal Reserve doing the “Twist”, Euro-financial market confusion, and Sovereign risk, to name a few. Deals are continuing to get done at slightly wider spreads.

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

9/16/11

Office

342

214

220

Retail

326

207

211

Multifamily

318

188

208

Industrial

333

201

212

Average Asking Spread

330

203

207

10-Year Treasury

3.83%

3.29%

2.05%

We expect the Cushman & Wakefield Sonnenblick-Goldman Survey will be updated during the upcoming week. Based on anecdotal information, the survey’s spreads appear to be “market good”.

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): -6.96%
S & P 500 (2):-9.64%
NASDAQ (3): -6.39%
Russell 2000 (4):-16.74%
MSCI U.S. REIT (5):-6.65%
_____
(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

9/23/2011

3-Month

0.12%

-0.01%

6-Month

0.18%

0.01%

2 Year

0.59%

0.21%

5 Year

2.01%

0.86%

10 Year

3.29%

1.83%