European Sovereign Credit
Real estate waited for the reaction to last week’s widespread downgrade of European sovereign debt.
Equity REITs Gain in December
Equity REITs showed a total return of 4.67 percent in December and a full year return of 8.29 percent. The best performing sectors in December were manufactured homes (+7.11 percent) and timber (+6.93 percent). The worst performing sectors in December were free standing retail (+1.46 percent) and self-storage (+2.74%).
On an annual basis, the best performing sectors were self-storage (+35.22 percent) and manufactured homes (+20.38 percent).
Average dividend yield as of December 31, 2011 was 3.83 percent.
Monday’s Numbers
The Trepp LLC survey showed little, if any, change from year-end levels. Hey, they’ve only been back for two weeks!
| 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) | |||||
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| 12/31/09 | 12/31/10 | 12/31/11 | 1/6/12 | Month Earlier |
| Office | 342 | 214 | 210 | 213 | 206 |
| Retail | 326 | 207 | 207 | 207 | 206 |
| Multifamily | 318 | 188 | 198 | 199 | 196 |
| Industrial | 333 | 201 | 205 | 202 | 201 |
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| Average Spread | 330 | 203 | 205 | 205 | 202 |
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| 10-Year Treasury | 3.83% | 3.29% | 1.88% | 1.88% | 2.03% |
The Cushman & Wakefield Sonnenblick-Goldman Survey shows rates “coming in” maybe five basis points.
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Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages | ||||
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| 12/31/10 | 1/5/12 |
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| Multifamily - Non-Agency | +270 | +245 |
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| Multifamily – Agency | +280 | +255 |
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| Regional Mall | +280 | +300 |
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| Grocery Anchored | +280 | +295 |
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| Strip and Power Centers |
| +320 |
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| Multi-Tenant Industrial | +270 | +305 |
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| CBD Office | +280 | +310 |
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| Suburban Office | +300 | +320 |
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| Full-Service Hotel | +320 | +350 |
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| Limited-Service Hotel | +400 | +360 |
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| 5-Year Treasury | 2.60% | 0.89% |
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| Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
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Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages | ||||
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| 12/31/10 | 1/5/12 |
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| Multifamily - Non-Agency | +190 | +205 |
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| Multifamily – Agency | +200 | +200 |
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| Regional Mall | +175 | +245 |
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| Grocery Anchor | +190 | +240 |
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| Strip and Power Centers |
| +255 |
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| Multi-Tenant Industrial | +190 | +245 |
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| CBD Office | +180 | +250 |
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| Suburban Office | +190 | +265 |
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| Full-Service Hotel | +290 | +300 |
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| Limited-Service Hotel | +330 | +310 |
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| 10-Year Treasury | 3.47% | 2.00% |
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| Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
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Property Type | Mid-Point of Floating-Rate Commercial Mortgage Spreads For 3 - 5 Commercial Real Estate Year Mortgages | ||||
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| 12/31/10 | 1/5/12 |
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| Multifamily – Non-Agency | +250-300 | +200-250 |
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| Multifamily- Agency | +300 | +220-265 |
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| Regional Mall | +275-300 | +250-350 |
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| Grocery Anchored | +275-300 | +240-325 |
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| Strip and Power Centers |
| +250-350 |
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| Multi-Tenant Industrial | +250-350 | +270-350 |
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| CBD Office | +225-300 | +275-350 |
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| Suburban Office | +250-350 | +300-350 |
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| Full-Service Hotel | +300-450 | +375-475 |
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| Limited-Service Hotel | +450-600 | +375-550 |
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| 1-Month LIBOR | 0.26% | 0.30% |
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| 3-Month LIBOR | 0.30% | 0.58% |
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| * A dash (-) indicates a range. | |||||
| Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
Year-to-Date Public Equity Capital Markets
DJIA (1): +1.67%S & P 500 (2): +2.50%
NASDAQ (3): +4.05%
Russell 2000 (4):+3.15%
Morgan Stanley U.S. REIT (5):+0.64%
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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 | |||
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| 12/31/10 | 12/31/11 | 1/13/12 |
| 3-Month | 0.12% | 0.01% | .02% |
| 6-Month | 0.18% | 0.06% | .05% |
| 2 Year | 0.59% | 0.24% | .22% |
| 5 Year | 2.01% | 0.83% | .79% |
| 10 Year | 3.29% | 1.88% | 1.86% |
