Headlines
Headlines are normally self-explanatory; we hope the ones we publish will convey a sense of the terms and conditions present in the real estate capital markets.
“Defaults on Commercial Real Estate Mortgages Held by Banks Decline in 4Q 2010”
Comment: First drop in number of defaults since the first quarter of 2006; finally…
“NCREIF National Property Index Up 13.1% for 2010”
Comment: The NCREIF (National Council of Real Estate Investment Fiduciaries) National Property Index is comprised of 6,175 properties valued at $247.1 billion. The Index turned positive at the end of the 3rd quarter of 2010 after seven sequentially trailing 12-month periods, indicating that we have “turned the corner” in terms of fundamentals and property performance (and therefore property value).
In our next posting we will publish the returns by region and property type for the 4th quarter 2010 as well as the trailing 12-month period ending December 31, 2010.
Monday’s Numbers
The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders remained unchanged; financing appears available at attractive rates (5.25% - 5.50%). Absent a severe “shock to the system”, rates seem likely to fluctuate within this narrow band for the foreseeable future.
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 | 1/28/2011 | 2/7/2011 | 2/14/2011 | 2/21/2011 | |
Office | 342 | 214 | 202 | 199 | 189 | 191 |
Retail | 326 | 207 | 191 | 188 | 181 | 179 |
Multifamily | 318 | 188 | 174 | 173 | 162 | 163 |
Industrial | 333 | 201 | 186 | 184 | 178 | 175 |
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Average Asking Spread | 330 | 203 | 188 | 186 | 178 | 177 |
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10-Year Treasury | 3.83% | 3.29% | 3.50% | 3.64% | 3.63% | 3.58% |
Source: Commercial Mortgage Alert; Trepp. |
The Cushman & Wakefield Sonnenblick-Goldman Survey showed little, if any, change over the past two weeks as all-in costs remain “attractive and acceptable” to lender and borrower alike.
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages | ||||
12/16/10 | 1/6/11 | 1/20/11 | 2/3/11 | 2/15/11 | |
Multifamily - Non-Agency | +270 | +250 | +250 | +250 | +250 |
Multifamily – Agency | +280 | +260 | +260 | +255 | +255 |
Regional Mall | +280 | +260 | +260 | +260 | +260 |
Grocery Anchored | +280 | +265 | +265 | +265 | +260 |
Multi-Tenant Industrial | +270 | +270 | +270 | +270 | +270 |
CBD Office | +280 | +270 | +260 | +260 | +260 |
Suburban Office | +300 | +300 | +270 | +270 | +270 |
Full-Service Hotel | +320 | +320 | +300 | +300 | +300 |
Limited-Service Hotel | +400 | +375 | +350 | +330 | +330 |
5-Year Treasury | 2.60% | 2.07% | 2.05% | 2.06% | 2.36% |
Source: Cushman & Wakefield Sonnenblick Goldman. |
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages | ||||
12/1610 | 1/6/11 | 1/20/11 | 2/3/11 | 2/15/11 | |
Multifamily - Non-Agency | +190 | +190 | +190 | +190 | +180 |
Multifamily – Agency | +200 | +195 | +195 | +200 | +190 |
Regional Mall | +175 | +180 | +180 | +180 | +180 |
Grocery Anchor | +190 | +185 | +185 | +185 | +185 |
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 | +270 | +250 | +250 | +240 |
Limited-Service Hotel | +330 | +310 | +280 | +260 | +260 |
10-Year Treasury | 3.47% | 3.38% | 3.45% | 3.46% | 3.63% |
Source: Cushman & Wakefield Sonnenblick Goldman. |
Property Type | Mid-Point of Floating-Rate Commercial Mortgage Spreads For 3 - 5 Commercial Real Estate Year Mortgages | ||||
12/1610 | 1/6/11 | 1/20/11 | 2/3/11 | 2/15/11 | |
Multifamily – Non-Agency | +250-300 | +225-300 | +225-300 | +225-300 | +225-300 |
Multifamily- Agency | +300 | +275-300 | +250-300 | +250-300 | +250-300 |
Regional Mall | +275-300 | +250-275 | +250-275 | +250-275 | +250-275 |
Grocery Anchored | +275-300 | +275-300 | +275-300 | +250-300 | +250-300 |
Multi-Tenant Industrial | +250-350 | +250-350 | +250-350 | +250-350 | +250-300 |
CBD Office | +225-300 | +225-300 | +250-300 | +250-300 | +250-300 |
Suburban Office | +250-350 | +250-300 | +275-350 | +275-350 | +275-350 |
Full-Service Hotel | +300-450 | +350-450 | +350-450 | +350-400 | +350-450 |
Limited-Service Hotel | +450-600 | +400-500 | +400-500 | +400-500 | +400-500 |
1-Month LIBOR | 0.26% | 0.26% | 0.26% | 0.26% | 0.26% |
3-Month LIBOR | 0.30% | 0.30% | 0.30% | 0.31% | 0.31% |
* A dash (-) indicates a range. | |||||
Source: Cushman & Wakefield Sonnenblick Goldman. |
Year-to-Date Public Equity Capital Markets
DJIA (1): +4.79%
S & P 500 (2):+4.86%
NASDAQ (3): +4.75%
Russell 2000 (4):+4.14%
MSCI U.S. REIT (5):+4.74%
(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 | 2/12/2011 | 2/18/2011 | 2/26/2011 | |
3-Month | 0.12% | 0.11% | 0.09% | 0.12% |
6-Month | 0.18% | 0.15% | 0.14% | 0.15% |
2 Year | 0.59% | 0.83% | 0.75% | 0.71% |
5 Year | 2.01% | 2.36% | 2.27% | 2.16% |
10 Year | 3.29% | 3.63% | 3.58% | 3.48% |
Source: Bloomberg LLP. |