Headlines
“Transaction Velocity (and Volume) Continues to Increase”
According to recent data from Real Capital Analytics, sales of commercial real estate properties totaled approximately $50.3 billion for the quarter ended March 31st, a decrease of approximately 18.3 percent compared to the prior quarter. The first quarter is typically the slowest quarter of the year.
The trend for sales of commercial real estate for the 12-months ended December 31, 2011, as compared to the 12-months ended March 31, 2012 is up. Sales for the 12-months ended December 31, 2011 was equal to approximately $211 billion as compared to approximately $226 billion for the period ending March 31, 2012, an increase of approximately 7.1 percent. The numbers are encouraging and represent measurable progress.
Monday’s Numbers
The Trepp LLC survey showed spreads widening over the past two weeks in response to the yield on 10-year Treasury bonds which has narrowed by about 15 basis points. Lending spreads continue to move in a narrow range with overall cost attractive at all maturities and from a wide array of capital sources. Slice it anyway you want: with floors skirting around 4.0 percent for the shortest maturity (5 years), financing remains attractive and very affordable.
Asking Spreads over U.S. Treasury Bonds in Basis Points | |||||
12/31/09 | 12/31/10 | 12/31/11 | 4/20 | Month Earlier | |
Office | 342 | 214 | 210 | 205 | 190 |
Retail | 326 | 207 | 207 | 198 | 174 |
Multifamily | 318 | 188 | 198 | 186 | 159 |
Industrial | 333 | 201 | 205 | 190 | 172 |
Average Spread | 330 | 203 | 205 | 195 | 174 |
10-Year Treasury | 3.83% | 3.29% | 1.88% | 1.96% | 2.23% |
Over the past month, the Cushman & Wakefield Sonnenblick-Goldman Survey narrowed, with 10-year rates improving as much as 40 basis points for some property sectors.
Property Type | Mid-Point of Fixed Rate Commercial Mortgage | ||||
12/31/10 | 1/5/12 | 1/26/12 | 2/28/12 | 3/28/12 | |
Multifamily - Non-Agency | +270 | +245 | +240 | +240 | +230 |
Multifamily – Agency | +280 | +255 | +245 | +210 | +195 |
Regional Mall | +280 | +300 | +300 | +300 | +275 |
Grocery Anchored | +280 | +295 | +295 | +290 | +270 |
Strip and Power Centers | +320 | +320 | +315 | +295 | |
Multi-Tenant Industrial | +270 | +305 | +310 | +310 | +285 |
CBD Office | +280 | +310 | +310 | +295 | +270 |
Suburban Office | +300 | +320 | +320 | +310 | +290 |
Full-Service Hotel | +320 | +350 | +350 | +350 | +325 |
Limited-Service Hotel | +400 | +360 | +360 | +360 | +335 |
5-Year Treasury | 2.60% | 0.89% | 0.78% | 0.83% | 1.03% |
Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
Property Type | Mid-Point of Fixed Rate Commercial Mortgage | ||||
12/31/10 | 1/5/12 | 1/26/12 | 2/28/12 | 3/28/12 | |
Multifamily - Non-Agency | +190 | +205 | +210 | +210 | +200 |
Multifamily – Agency | +200 | +200 | +205 | +180 | +165 |
Regional Mall | +175 | +245 | +245 | +235 | +275 |
Grocery Anchor | +190 | +240 | +240 | +230 | +270 |
Strip and Power Centers | +255 | +255 | +250 | +290 | |
Multi-Tenant Industrial | +190 | +245 | +255 | +250 | +280 |
CBD Office | +180 | +250 | +240 | +320 | +270 |
Suburban Office | +190 | +265 | +260 | +250 | +290 |
Full-Service Hotel | +290 | +300 | +290 | +290 | +325 |
Limited-Service Hotel | +330 | +310 | +315 | +315 | +345 |
10-Year Treasury | 3.47% | 2.00% | 1.97% | 1.90% | 2.21% |
Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
Property Type | Mid-Point of Floating-Rate Commercial Mortgage | ||||
12/31/10 | 1/5/12 | 1/26/12 | 2/28/12 | 3/28/12 | |
Multifamily – Non-Agency | +250-300 | +200-250 | +200-250 | +200-250 | +200-250 |
Multifamily- Agency | +300 | +220-265 | +220-265 | +220-265 | +220-265 |
Regional Mall | +275-300 | +250-350 | +210-265 | +200-265 | +200-265 |
Grocery Anchored | +275-300 | +240-325 | +200-275 | +200-275 | +200-275 |
Strip and Power Centers | +250-350 | +225-300 | +225-300 | +225-300 | |
Multi-Tenant Industrial | +250-350 | +270-350 | +225-305 | +225-305 | +225-305 |
CBD Office | +225-300 | +275-350 | +225-300 | +225-300 | +225-300 |
Suburban Office | +250-350 | +300-350 | +250-325 | +250-325 | +250-325 |
Full-Service Hotel | +300-450 | +375-475 | +350-425 | +275-400 | +275-400 |
Limited-Service Hotel | +450-600 | +375-550 | +400-500 | +350-550 | +325-450 |
1-Month LIBOR | 0.26% | 0.30% | 0.27% | 0.24% | 0.24% |
3-Month LIBOR | 0.30% | 0.58% | 0.55% | 0.49% | 0.47% |
* A dash (-) indicates a range. | |||||
Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
Year-to-Date Public Equity Capital Markets
DJIA (1): +8.27%
S & P 500 (2): +11.59%
NASDAQ (3): +17.81%
Russell 2000 (4):+11.41%
Morgan Stanley U.S. REIT (5):+12.97%
_____
(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 | 12/31/11 | 4/28/12 | |
3-Month | 0.12% | 0.01% | 0.09% |
6-Month | 0.18% | 0.06% | 0.14% |
2 Year | 0.59% | 0.24% | 0.26% |
5 Year | 2.01% | 0.83% | 0.83% |
7 Year | 1.34% | ||
10 Year | 3.29% | 1.88% | 1.93% |
Key Rates (in Percentages) | |||||
Current | 1 Mo. Prior | 3 Mo. Prior | 6 Mo. Prior | 1 Yr. Prior | |
Fed Funds Rate | 0.14 | 0.15 | 0.08 | 0.07 | 0.10 |
Federal Reserve Target Rate | 0.25 | 0.25 | 0.25 | 0.25 | 0.25 |
Prime Rate | 3.25 | 3.25 | 3.25 | 3.25 | 3.25 |
US Unemployment Rate | 8.20 | 8.30 | 8.50 | 9.00 | 8.90 |
1-Month Libor | 0.24 | 0.24 | 0.27 | 0.25 | 0.21 |
3-Month Libor | 0.47 | 0.47 | 0.55 | 0.43 | 0.27 |
