Headlines
“Pru[dential] Sees 20 Percent Increase in Commercial Mortgage Lending This Year”
While certainly a meaningful and substantial increase, this is not going to exactly move the needle for the average borrower as insurance companies by and large focus their general account’s attention on core properties, gateway cities, and “pristine” borrowers. Further, the $11.6 billion allocation is divided among a number of lending programs including: conduit lending - $750 million; agency and affordable housing - $3.1 billion; Prudential’s general account - $7.0 billion; and $750 million of miscellaneous.
Hopefully other insurance companies will follow suit and then conduit lenders will gain some traction and banks will finally be de-leveraged and voila, we will have a commercial and multifamily mortgage market again.
Monday’s Numbers
During the survey period, the Trepp LLC survey indicated spreads continued to widen five to 10 basis points.
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 | 12/31/11 | 2/3/12 | Month Earlier | |
Office | 342 | 214 | 210 | 219 | 213 |
Retail | 326 | 207 | 207 | 214 | 207 |
Multifamily | 318 | 188 | 198 | 206 | 199 |
Industrial | 333 | 201 | 205 | 209 | 202 |
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Average Spread | 330 | 203 | 205 | 212 | 205 |
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10-Year Treasury | 3.83% | 3.29% | 1.88% | 1.92% | 1.97% |
The Cushman & Wakefield Sonnenblick-Goldman Survey shows rates unchanged to down five basis points. Lenders seem to be going about their business, reacting to market events as necessary.
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages | ||||
12/31/10 | 1/5/12 | 1/26/12 |
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Multifamily - Non-Agency | +270 | +245 | +240 |
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Multifamily – Agency | +280 | +255 | +245 |
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Regional Mall | +280 | +300 | +300 |
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Grocery Anchored | +280 | +295 | +295 |
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Strip and Power Centers |
| +320 | +320 |
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Multi-Tenant Industrial | +270 | +305 | +310 |
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CBD Office | +280 | +310 | +310 |
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Suburban Office | +300 | +320 | +320 |
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Full-Service Hotel | +320 | +350 | +350 |
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Limited-Service Hotel | +400 | +360 | +360 |
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5-Year Treasury | 2.60% | 0.89% | 0.78% |
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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 | 1/5/12 | 1/26/12 |
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Multifamily - Non-Agency | +190 | +205 | +210 |
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Multifamily – Agency | +200 | +200 | +205 |
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Regional Mall | +175 | +245 | +245 |
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Grocery Anchor | +190 | +240 | +240 |
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Strip and Power Centers |
| +255 | +255 |
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Multi-Tenant Industrial | +190 | +245 | +255 |
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CBD Office | +180 | +250 | +240 |
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Suburban Office | +190 | +265 | +260 |
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Full-Service Hotel | +290 | +300 | +290 |
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Limited-Service Hotel | +330 | +310 | +315 |
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10-Year Treasury | 3.47% | 2.00% | 1.97% |
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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 | 1/5/12 | 1/26/12 |
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Multifamily – Non-Agency | +250-300 | +200-250 | +200-250 |
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Multifamily- Agency | +300 | +220-265 | +220-265 |
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Regional Mall | +275-300 | +250-350 | +210-265 |
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Grocery Anchored | +275-300 | +240-325 | +200-275 |
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Strip and Power Centers |
| +250-350 | +225-300 |
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Multi-Tenant Industrial | +250-350 | +270-350 | +225-305 |
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CBD Office | +225-300 | +275-350 | +225-300 |
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Suburban Office | +250-350 | +300-350 | +250-325 |
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Full-Service Hotel | +300-450 | +375-475 | +350-425 |
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Limited-Service Hotel | +450-600 | +375-550 | +400-500 |
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1-Month LIBOR | 0.26% | 0.30% | 0.27% |
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3-Month LIBOR | 0.30% | 0.58% | 0.55% |
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* A dash (-) indicates a range. | |||||
Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
Year-to-Date Public Equity Capital Markets
DJIA (1): +4.78%
S & P 500 (2): +6.76%
NASDAQ (3): +11.47%
Russell 2000 (4):+9.78%
Morgan Stanley U.S. REIT (5):+6.64%
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(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 | 2/11/12 | |
3-Month | 0.12% | 0.01% | .08% |
6-Month | 0.18% | 0.06% | .12% |
2 Year | 0.59% | 0.24% | .27% |
5 Year | 2.01% | 0.83% | .82% |
10 Year | 3.29% | 1.88% | 1.99% |
