Headlines
Headlines and quotes we publish are intended to convey a sense of the terms and conditions present in the real estate capital markets: “Bank Regulators Propose Risk-Retention Rules for Securitized Assets, Including Commercial Mortgages”
The food fight regarding risk-retention is underway. And why not when there are six potential ways a lender can satisfy the requirements, including:
- Avoid retention completely if loans meet underwriting requirements established by the regulators.
- Retain a “vertical slice” meaning 5 percent of each part of the security.
- Retain a “horizontal slice” comprised of 5 percent of the riskiest tranche.
- A combination of 2 and 3 above.
- A “representative sample” (totaling 5 percent) of loans in the pool.
- Establishment of a cash reserve equal to 5 percent of the entire securitization.
Monday’s Numbers
The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders widened slightly as a result of a widening in spreads for 10-year U.S. Treasury bonds. Average rates closed the reporting period at 5.24%.
Due to the Good Friday holiday closing of the financial markets the weekly Trepp survey was not updated this week.
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 | 4/8/11 | |
Office | 342 | 214 | 178 |
Retail | 326 | 207 | 169 |
Multifamily | 318 | 188 | 150 |
Industrial | 333 | 201 | 165 |
Average Asking Spread | 330 | 203 | 166 |
10-Year Treasury | 3.83% | 3.29% | 3.58% |
The Cushman & Wakefield Sonnenblick-Goldman survey ended March where it started with spreads in the 250 basis point range (for 5-year loans) and 185 basis point range (for 10-year loans).
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages | ||||
12/16/10 | 2/15/11 | 3/2/11 | 3/31/11 | 4/12/11 | |
Multifamily - Non-Agency | +270 | +250 | +245 | +245 | +245 |
Multifamily – Agency | +280 | +255 | +250 | +250 | +240 |
Regional Mall | +280 | +260 | +260 | +260 | +260 |
Grocery Anchored | +280 | +260 | +260 | +260 | +260 |
Multi-Tenant Industrial | +270 | +270 | +265 | +265 | +265 |
CBD Office | +280 | +260 | +260 | +260 | +260 |
Suburban Office | +300 | +270 | +270 | +270 | +270 |
Full-Service Hotel | +320 | +300 | +300 | +300 | +290 |
Limited-Service Hotel | +400 | +330 | +325 | +325 | +320 |
5-Year Treasury | 2.60% | 2.36% | 2.17% | 2.23% | 2.23% |
Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages | ||||
12/1610 | 2/15/11 | 3/2/11 | 3/31/11 | 4/12/11 | |
Multifamily - Non-Agency | +190 | +180 | +180 | +180 | +180 |
Multifamily – Agency | +200 | +190 | +185 | +185 | +185 |
Regional Mall | +175 | +180 | +180 | +180 | +180 |
Grocery Anchor | +190 | +185 | +185 | +185 | +181 |
Multi-Tenant Industrial | +190 | +190 | +190 | +190 | +190 |
CBD Office | +180 | +180 | +180 | +180 | +180 |
Suburban Office | +190 | +190 | +190 | +190 | +190 |
Full-Service Hotel | +290 | +240 | +230 | +230 | +2320 |
Limited-Service Hotel | +330 | +260 | +260 | +260 | +240 |
10-Year Treasury | 3.47% | 3.63% | 3.47% | 3.45% | 3.51% |
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 | 2/15/11 | 3/2/11 | 3/31/11 | 4/12/11 | |
Multifamily – Non-Agency | +250-300 | +225-300 | +225-300 | +225-300 | +225-325 |
Multifamily- Agency | +300 | +250-300 | +250-300 | +250-300 | +250-310 |
Regional Mall | +275-300 | +250-275 | +225-275 | +225-300 | +225-300 |
Grocery Anchored | +275-300 | +250-300 | +225-275 | +225-300 | +225-300 |
Multi-Tenant Industrial | +250-350 | +250-300 | +250-350 | +250-350 | +250-350 |
CBD Office | +225-300 | +250-300 | +225-300 | +225-300 | +225-300 |
Suburban Office | +250-350 | +275-350 | +275-350 | +275-350 | +275-350 |
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% | 0.26% | 0.26% | 0.24% | 0.22% |
3-Month LIBOR | 0.30% | 0.31% | 0.31% | 0.30% | 0.28% |
* A dash (-) indicates a range. | |||||
Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
Year-to-Date Public Equity Capital Markets
DJIA (1): +8.02%
S & P 500 (2):+6.34%
NASDAQ (3): +6.31%
Russell 2000 (4):+7.91%
MSCI U.S. REIT (5):+8.19%
_____
(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 | 4/24/2011 | |
3-Month | 0.12% | 0.05% |
6-Month | 0.18% | 0.10% |
2 Year | 0.59% | 0.65% |
5 Year | 2.01% | 2.11% |
10 Year | 3.29% | 3.39% |
