Monday’s Numbers: January 10, 2011

2010 ended on a strong note with all-in 10-year mortgage spreads in 5.25%+/- range which should have proved attractive to all but the most jaded investors. But as they say, it’s still “early days” and few lenders have announced plans and targets for 2011.

January 10, 2011

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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.

“Trepp Reports CMBS Delinquency Rate Hits Record High of 9.2% in December”

Comment: Notwithstanding a number of improving indicators, Trepp’s report is just another way of saying we have a long way to go.

“Eight First Quarter 2011CMBS Deals in the Works”

Comment: Five multi-borrower, three single borrower deals, $13 billion in proposed issuance; Securitization 2.0 is gaining traction.

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders will be updated in next week’s edition of Monday’s Numbers.

2010 ended on a strong note with all-in 10-year mortgage spreads in 5.25%+/- range which should have proved attractive to all but the most jaded investors. But as they say, it’s still “early days” and few lenders have announced plans and targets for 2011.

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
Office	342	214
Retail	326	207
Multifamily	318	188
Industrial	333	201

Average Asking Spread	330	203

10-Year Treasury	3.83%	3.29%
Source: Commercial Mortgage Alert; Trepp.

The Cushman & Wakefield Sonnenblick-Goldman fixed and floating mortgage rate survey (below) came in a little at yearend, strengthening our conviction that lender’s are becoming more comfortable with the (real estate) world around them. That said, lender’s will continue to be cautious and vigilant and underwriting standards will remain stringent.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages
	12/16/10	1/6/11
Multifamily - Non-Agency	+270	+250
Multifamily – Agency	+280	+260
Regional Mall	+280	+260
Strip/Power Center	+280	+265
Multi-Tenant Industrial	+270	+270
CBD Office	+280	+270
Suburban Office	+300	+300
Full-Service Hotel	+320	+320
Limited-Service Hotel	+400	+375
5-Year Treasury	2.60%	2.07%
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
Multifamily - Non-Agency	+190	+190
Multifamily – Agency	+200	+195
Regional Mall	+175	+180
Strip/Power Center	+190	+185
Multi-Tenant Industrial	+190	+190
CBD Office	+180	+180
Suburban Office	+190	+190
Full-Service Hotel	+290	+270
Limited-Service Hotel	+330	+310
10-Year Treasury	3.47%	3.38%
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
Multifamily – Non-Agency	+250-300	+225-300
Multifamily- Agency	+300	+275-300
Regional Mall	+275-300	+250-275
Strip/Power Center	+275-300	+275-300
Multi-Tenant Industrial	+250-350	+250-350
CBD Office	+225-300	+225-300
Suburban Office	+250-350	+250-300
Full-Service Hotel	+300-450	+350-450
Limited-Service Hotel	+450-600	+400-500
1-Month LIBOR	0.26%	0.26%
3-Month LIBOR	0.30%	0.30%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +1.11%
S & P 500⁽²⁾:+1.00%
NASDAQ⁽³⁾: +1.82%
Russell 2000 ⁽⁴⁾: -0.18%
MSCI U.S. REIT ⁽⁵⁾:-1.02%

^{(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	1/8/11
3-Month	0.12%	0.13%
6-Month	0.18%	0.17%
2 Year	0.59%	0.59%
5 Year	2.01%	1.96%
10 Year	3.29%	3.32%
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.