Headlines
“All-in-All, a Very Quiet Week”
The past week was very quiet; volatile as usual, but very quiet. There was little to report: some deals funded; some properties were turned over to their special services; some deals went under contract; some fell out of contract; and some closed. Rates were basically unchanged as the capital markets continue to try and rationalize what is happening in the Euro-capital markets in general, and in Greece, specifically.
Equity REITs had a good January, with the NAREIT Equity REIT Index up 6.36% and the dividend yield at 3.40 percent, which is very attractive on a relative basis. Top performers were: hotels (+10.87 percent) and industrial (+10.39 percent). The worst performing sectors were: multifamily (-3.91 percent) and self-storage (-4.46 percent).
On the lending side, Fitch reported CMBS delinquencies (loans that are delinquent at least 60 days or in foreclosure) for Fitch-rated transactions equaled 8.32 percent of outstanding balances, down 5 basis points since December 31, 2011 and 27 basis points since January 31, 2011.
The worst performing sectors were: multifamily (12.77 percent delinquent, followed by hotel (12.21 percent) and industrial (10.40 percent).
Monday’s Numbers
During the survey period, the Trepp LLC survey indicated spreads unchanged during the reporting period..
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 | 2/10/12 | Month Earlier | |
Office | 342 | 214 | 210 | 218 | 215 |
Retail | 326 | 207 | 207 | 213 | 211 |
Multifamily | 318 | 188 | 198 | 206 | 206 |
Industrial | 333 | 201 | 205 | 209 | 207 |
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Average Spread | 330 | 203 | 205 | 212 | 209 |
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10-Year Treasury | 3.83% | 3.29% | 1.88% | 1.99% | 1.88% |
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): +6.00%
S & P 500 (2): +8.24%
NASDAQ (3): +13.31%
Russell 2000 (4):+11.86%
Morgan Stanley U.S. REIT (5):+7.07%
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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 | 2/18/12 | |
3-Month | 0.12% | 0.01% | .08% |
6-Month | 0.18% | 0.06% | .11% |
2 Year | 0.59% | 0.24% | .29% |
5 Year | 2.01% | 0.83% | .86% |
10 Year | 3.29% | 1.88% | 2.00% |
Key Rates (in Percentages) | |||||
| Current | 1 Mo. Prior | 3 Mo. Prior | 6 Mo. Prior | 1 Yr. Prior |
Fed Funds Rate | 0.11 | 0.07 | 0.08 | 0.12 | 0.16 |
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 | 8.30 | 8.50 | 8.90 | 9.10 | 9.10 |
1-Month Libor | 0.25 | 0.28 | .025 | .021 | 0.26 |
3-Month Libor | 0.49 | 0.56 | 0.48 | 0.30 | 0.31 |
