Monday’s Numbers: February 7, 2011

The Commercial Mortgage Alert Trepp weekly survey of 15 active portfolio lenders remained unchanged as a decrease in spreads was offset by an increase in 10-year Treasury bonds. An all-in cost of 5.25% - 5.30% remains very attractive.

February 7, 2011

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Headlines

The following headlines convey a sense of the terms and conditions present in the real estate capital markets: “ProLogis and AMB to Merge as Equals,” “Real Estate Funds’ Capital Raising in 2010 Surpasses 2009 Total,” and “Global Property Transaction Volume Increased in 2010.”

Comment: Fund raising and transaction volume increase year-over-year; merger of equals deals with those worrisome social details.

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders remained unchanged as a decrease in spreads was offset by an increase in 10-year Treasury bonds. An all-in cost of 5.25% - 5.30% remains very attractive.

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	1/7/11	1/14/11	1/21/11	1/28/2011
Office	342	214	200	202	204	202
Retail	326	207	193	192	194	191
Multifamily	318	188	176	177	178	174
Industrial	333	201	188	187	188	186

Average Asking Spread	330	203	189	189	191	188

10-Year Treasury	3.83%	3.29%	3.38%	3.40%	3.45%	3.50%
Source: Commercial Mortgage Alert; Trepp.

Commentary regarding the Cushman & Wakefield Sonnenblick-Goldman Survey showed little, if any, change over the past two weeks as all-in costs remain “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
Multifamily - Non-Agency	+270	+250	+250	+250
Multifamily – Agency	+280	+260	+260	+255
Regional Mall	+280	+260	+260	-260
Strip/Power Center	+280	+265	+265	+265
Multi-Tenant Industrial	+270	+270	+270	+270
CBD Office	+280	+270	+260	+260
Suburban Office	+300	+300	+270	+270
Full-Service Hotel	+320	+320	+300	+300
Limited-Service Hotel	+400	+375	+350	+330
5-Year Treasury	2.60%	2.07%	2.05%	2.06%
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
Multifamily - Non-Agency	+190	+190	+190	+190
Multifamily – Agency	+200	+195	+195	+200
Regional Mall	+175	+180	+180	+180
Strip/Power Center	+190	+185	+185	+185
Multi-Tenant Industrial	+190	+190	+190	+190
CBD Office	+180	+180	+180	+180
Suburban Office	+190	+190	+190	+190
Full-Service Hotel	+290	+270	+250	+250
Limited-Service Hotel	+330	+310	+280	+260
10-Year Treasury	3.47%	3.38%	3.45%	3.46%
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
Multifamily – Non-Agency	+250-300	+225-300	+225-300	+225-300
Multifamily- Agency	+300	+275-300	+250-300	+250-300
Regional Mall	+275-300	+250-275	+250-275	+250-275
Strip/Power Center	+275-300	+275-300	+275-300	+250-300
Multi-Tenant Industrial	+250-350	+250-350	+250-350	+250-350
CBD Office	+225-300	+225-300	+250-300	+250-300
Suburban Office	+250-350	+250-300	+275-350	+275-350
Full-Service Hotel	+300-450	+350-450	+350-450	+350-400
Limited-Service Hotel	+450-600	+400-500	+400-500	+400-500
1-Month LIBOR	0.26%	0.26%	0.26%	0.26%
3-Month LIBOR	0.30%	0.30%	0.30%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +4.46%
S & P 500⁽²⁾:+4.14%
NASDAQ⁽³⁾: +4.31%
Russell 2000 ⁽⁴⁾: -1.40%
MSCI U.S. REIT ⁽⁵⁾:+2.27%
_____
^{(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	2/5/2011
3-Month	0.12%	0.15%
6-Month	0.18%	0.17%
2 Year	0.59%	0.74%
5 Year	2.01%	2.26%
10 Year	3.29%	3.64%
Source: Bloomberg LLP.

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Stephen Blank

Stephen R. Blank joined ULI in December 1998 as Senior Fellow, Finance. His primary responsibilities include: expanding ULI’s real estate capital markets information and education programs; authoring real estate capital market commentary; participating as a principal researcher and adviser for the Emerging Trends in Real Estate series of publications; organizing and participating in real estate capital markets programs at ULI events worldwide; and participating in industry meetings, seminars, and conferences. Prior to joining ULI, Blank served from December 1993 to November 1998 as Managing Director, Real Estate Investment Banking of Oppenheimer & Co., Inc. His responsibilities included: structuring, underwriting, and executing corporate financings including initial public offerings of common and preferred shares, unsecured debentures, and convertible bonds; property acquisitions, dispositions, and financing; and financial advisory services including mergers and acquisitions, corporate restructurings, and recapitalizations.