Headlines
“Loan Written at Market’s Peak Gets Three More Years”
The Problem: The original loan, written in 2007 at the market’s peak, was secured by a shopping center and then included in a securitization. Today, property net operating income is insufficient to service the interest only first mortgage as well as mezzanine debt behind the senior CMBS debt.
The Solution: The loan’s maturity was extended to April 2015, requiring interest-only debt service payments at a coupon rate of 4.75 percent, with interest accruing at the loan’s original 6.37 percent rate. Any excess property cash flow will be used to reduce the mortgage principal as well as accrued interest.
Barclays Capital estimates that as much as 70 percent of the CMBS loans written in 2007 and maturing this year will not be able to be refinanced “easily.”
Monday’s Numbers
The Trepp LLC survey showed spreads widening as many as 8 basis points, possibly in response to continued events in the Euro-zone.
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 | 12/31/11 | 1/13/12 | Month Earlier | |
Office | 342 | 214 | 210 | 215 | 222 |
Retail | 326 | 207 | 207 | 211 | 217 |
Multifamily | 318 | 188 | 198 | 206 | 210 |
Industrial | 333 | 201 | 205 | 207 | 212 |
Average Spread | 330 | 203 | 205 | 210 | 215 |
10-Year Treasury | 3.83% | 3.29% | 1.88% | 1.86% | 2.09% |
The Cushman & Wakefield Sonnenblick-Goldman Survey shows rates “coming in” maybe five basis points.
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages | ||||
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. | |||||
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages | ||||
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. | |||||
Property Type | Mid-Point of Floating-Rate Commercial Mortgage Spreads For 3 - 5 Commercial Real Estate Year Mortgages | ||||
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): +4.12%
S & P 500 (2): +4.59%
NASDAQ (3): +6.97%
Russell 2000 (4):+5.91%
Morgan Stanley U.S. REIT (5):+3.29%
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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 | 12/31/11 | 1/21/12 | |
3-Month | 0.12% | 0.01% | .04% |
6-Month | 0.18% | 0.06% | .06% |
2 Year | 0.59% | 0.24% | .24% |
5 Year | 2.01% | 0.83% | .89% |
10 Year | 3.29% | 1.88% | 2.02% |
Urban Land Institute
