Headlines
“By the Numbers”
$38.4 billion – Life company commercial real estate lending activity in 2010, nearly double the 2009 total.
5.7 percent – Year-over-year gain in U.S. hotel occupancy during the first quarter 2011.
Source: The Institutional Real Estate letter, North America; the American Council of Life Insurers; Smith Travel research.
Monday’s Numbers
The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders “took a licking” as spreads widened in many sectors of the debt capital markets. Regardless, all-in costs remain in the 5.00+/- percent range and should be range bound for the foreseeable future, subject to a “Black Swan” event (which is not too hard to imagine if one just looks at the newspaper each morning).
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 | 6/3/11 | |
Office | 342 | 214 | 187 |
Retail | 326 | 207 | 178 |
Multifamily | 318 | 188 | 164 |
Industrial | 333 | 201 | 174 |
Average Asking Spread | 330 | 203 | 176 |
10-Year Treasury | 3.83% | 3.29% | 3.07% |
The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ended June 2 showed floating rate spreads narrowing maybe 5 basis points with fixed rate spreads basically unchanged. Clearly, financing remains available at attractive and affordable rates.
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages | ||||
12/16/10 | 3/31/11 | 4/28/11 | 5/12/11 | 6/2/11 | |
Multifamily - Non-Agency | +270 | +245 | +230 | +225 | +225 |
Multifamily – Agency | +280 | +250 | +205 | +200 | +200 |
Regional Mall | +280 | +260 | +260 | +255 | +255 |
Grocery Anchored | +280 | +260 | +245 | +245 | +245 |
Strip and Power Centers |
|
|
| +265 | +265 |
Multi-Tenant Industrial | +270 | +265 | +245 | +245 | +245 |
CBD Office | +280 | +260 | +250 | +250 | +250 |
Suburban Office | +300 | +270 | +260 | +260 | +260 |
Full-Service Hotel | +320 | +300 | +280 | +275 | +265 |
Limited-Service Hotel | +400 | +325 | +320 | +320 | +300 |
5-Year Treasury | 2.60% | 2.23% | 2.05% | 1.88% | 1.62% |
Source: Cushman & Wakefield Sonnenblick Goldman. |
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages | ||||
12/1610 | 3/31/11 | 4/12/11 | 5/12/11 | 6/2/11 | |
Multifamily - Non-Agency | +190 | +180 | +180 | +180 | +180 |
Multifamily – Agency | +200 | +185 | +185 | +175 | +170 |
Regional Mall | +175 | +180 | +180 | +180 | +180 |
Grocery Anchor | +190 | +185 | +181 | +175 | +175 |
Strip and Power Centers |
|
|
| +190 | +190 |
Multi-Tenant Industrial | +190 | +190 | +190 | +185 | +185 |
CBD Office | +180 | +180 | +180 | +180 | +180 |
Suburban Office | +190 | +190 | +190 | +190 | +190 |
Full-Service Hotel | +290 | +230 | +230 | +220 | +220 |
Limited-Service Hotel | +330 | +260 | +240 | +240 | +240 |
10-Year Treasury | 3.47% | 3.45% | 3.51% | 3.22% | 2.99% |
Source: Cushman & Wakefield Sonnenblick Goldman. |
Property Type | Mid-Point of Floating-Rate Commercial Mortgage Spreads For 3 - 5 Commercial Real Estate Year Mortgages | ||||
12/16/10 | 4/12/11 | 4/28/11 | 5/12/11 | 6/2/11 | |
Multifamily – Non-Agency | +250-300 | +225-325 | +225-315 | +205-300 | +200-275 |
Multifamily- Agency | +300 | +250-310 | +250-310 | +225-310 | +220-270 |
Regional Mall | +275-300 | +225-300 | +225-300 | +200-275 | +205-275 |
Grocery Anchored | +275-300 | +225-300 | +225-300 | +210-285 | +215-285 |
Strip and Power Centers |
|
|
| +230-300 | +235-300 |
Multi-Tenant Industrial | +250-350 | +250-350 | +250-350 | +235-325 | +230-325 |
CBD Office | +225-300 | +225-300 | +225-300 | +225-300 | +215-300 |
Suburban Office | +250-350 | +275-350 | +250-350 | +250-350 | +250-325 |
Full-Service Hotel | +300-450 | +350-450 | +350-450 | +350-450 | +350-450 |
Limited-Service Hotel | +450-600 | +400-500 | +400-500 | +400-500 | +400-500 |
1-Month LIBOR | 0.26% | 0.22% | 0.21% | 0.20% | 0.19% |
3-Month LIBOR | 0.30% | 0.28% | 0.27% | 0.26% | 0.25% |
* A dash (-) indicates a range. | |||||
Source: Cushman & Wakefield Sonnenblick Goldman. |
Year-to-Date Public Equity Capital Markets
DJIA (1): +3.2%
S & P 500 (2):+1.06%
NASDAQ (3): -0.34%
Russell 2000 (4):-0.52%
MSCI U.S. REIT (5):+4.29%
(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 | 6/11/2011 | |
3-Month | 0.12% | 0.04% |
6-Month | 0.18% | 0.10% |
2 Year | 0.59% | 0.40% |
5 Year | 2.01% | 1.56% |
10 Year | 3.29% | 2.97% |