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 |
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Average Asking Spread | 330 | 203 | 189 | 189 | 191 | 188 |
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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% |
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* 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%
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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 | 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. |