Monday’s Numbers: July 9, 2012

The Trepp, LLC survey showed spreads coming in as much as 10 basis points, an incredible amount given the turbulence affecting the credit markets, i.e., LIBORgate; Euro-crises; increased CMBS delinquencies, and widening spreads in CMBS new issues, to name just a few. Maybe it’s the heat as no one seems to be using these spreads to actually price borrower cost, relying solely on floor pricing.

July 9, 2012

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The Trepp, LLC survey showed spreads coming in as much as 10 basis points, an incredible amount given the turbulence affecting the credit markets, i.e., LIBORgate; Euro-crises; increased CMBS delinquencies, and widening spreads in CMBS new issues, to name just a few. Maybe it’s the heat as no one seems to be using these spreads to actually price borrower cost, relying solely on floor pricing.

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	6/28/12	Month Earlier
Office	342	214	210	229	233
Retail	326	207	207	224	231
Multifamily	318	188	198	218	222
Industrial	333	201	205	222	226
Average Spread	330	203	205	223	228
10-Year Treasury	3.83%	3.29%	1.88%	1.69%	1.74%

The Cushman & Wakefield Equity, Debt, and Structured Finance Commercial Mortgage Spread survey showed spreads for 10-year fixed rate mortgages unchanged during the survey period.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages
	12/31/10	3/28/12	4/27/12	5/30/12	6/28/12
Multifamily - Non-Agency	+270	+230	+240	+250	+245
Multifamily – Agency	+280	+195	+200	+210	+225
Regional Mall	+280	+275	+275	+300	+300
Grocery Anchored	+280	+270	+270	+295	+295
Strip and Power Centers		+295	+295	+320	+320
Multi-Tenant Industrial	+270	+310	+285	+305	+305
CBD Office	+280	+295	+270	+295	+300
Suburban Office	+300	+310	+290	+315	+315
Full-Service Hotel	+320	+350	+340	+360	+360
Limited-Service Hotel	+400	+360	+350	+370	+370
5-Year Treasury	2.60%	0.83%	0.83%	0.69%	0.69%
Source: Cushman & Wakefield Equity, Debt, and Structured Finance.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages
	12/31/10	3/28/12	4/27/12	5/30/12	6/28/12
Multifamily - Non-Agency	+190	+200	+210	+220	+220
Multifamily – Agency	+200	+165	+170	+190	+200
Regional Mall	+175	+275	+220	+245	+245
Grocery Anchor	+190	+270	+200	+230	+235
Strip and Power Centers		+290	+235	+260	+255
Multi-Tenant Industrial	+190	+280	+240	+260	+260
CBD Office	+180	+270	+220	+250	+250
Suburban Office	+190	+290	+245	+270	+265
Full-Service Hotel	+290	+325	+260	+295	+290
Limited-Service Hotel	+330	+345	+290	+320	+310
10-Year Treasury	3.47%	2.21%	1.95%	1.62%	1.58%
Source: Cushman & Wakefield Equity, Debt, and Structured Finance.

Property Type	Mid-Point of Floating-Rate Commercial Mortgage Spreads For 3 - 5 Commercial Real Estate Year Mortgages
	12/31/10	3/28/12	4/27/12	5/30/12	6/28/12
Multifamily – Non-Agency	+250-300	+200-250	+200-250	+200-250	+200-260
Multifamily- Agency	+300	+220-265	+220-265	+220-265	+220-265
Regional Mall	+275-300	+200-265	+200-265	+210-275	+210-275
Grocery Anchored	+275-300	+200-275	+200-275	+205-275	+210-275
Strip and Power Centers		+225-300	+225-300	+225-300	+225-300
Multi-Tenant Industrial	+250-350	+225-305	+225-305	+235-305	+235-305
CBD Office	+225-300	+225-300	+225-300	+225-300	+225-300
Suburban Office	+250-350	+250-325	+250-325	+250-325	+250-325
Full-Service Hotel	+300-450	+275-400	+250-400	+275-400	+275-400
Limited-Service Hotel	+450-600	+325-450	+325-450	+325-450	+325-450
1-Month LIBOR	0.26%	0.24%	0.24%	0.24%	0.24%
3-Month LIBOR	0.30%	0.47%	0.47%	0.47%	0.47%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Equity, Debt, and Structured Finance.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +4.54%
S & P 500^(2):+7.72%
NASDAQ⁽³⁾: +12.75%
Russell 2000 ⁽⁴⁾:+9.02%
Morgan Stanley U.S. REIT ⁽⁵⁾:+13.93%

^{(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	7/7/12
3-Month	0.12%	0.01%	0.07%
6-Month	0.18%	0.06%	0.14%
2 Year	0.59%	0.24%	0.27%
5 Year	2.01%	0.83%	0.64%
7 Year			1.01%
10 Year	3.29%	1.88%	1.55%

Key Rates (in Percentages)
	Current	1 Mo. Prior	3 Mo. Prior	6 Mo. Prior	1 Yr. Prior
Fed Funds Rate	0.18	0.16	0.11	0.07	0.10
Federal Reserve Target Rate	0.25	0.25	0.25	0.25	0.25
Prime Rate	3.25	3.25	3.25	3.25	3.25
US Unemployment Rate	8.20	8.20	8.20	8.50	9.10
1-Month Libor	0.25	0.24	0.24	0.30	0.19
3-Month Libor	0.46	0.47	0.47	0.58	0.25

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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.