Monday’s Numbers: March 21, 2011

The Commercial Mortgage Alert Trepp weekly survey of 15 active portfolio lenders continued to narrow week-over-week with financing available at attractive rates (5.25%+/-). The Cushman & Wakefield Sonnenblick-Goldman Survey came in slightly over the past two weeks—we expect rates to remain at these levels barring a “shock” to the system for the foreseeable future.

March 21, 2011

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Headlines

The following headline conveys a sense of the terms and conditions present in the real estate capital markets: “Mexican Stock Market Gets Its First Real Estate Trust.”

With apologies to Walt Disney, “It’s a REIT world after all,” as evidenced by the listing on Thursday of Fibra Uno, Mexico’s first REIT. The initial public offering raised $300 million. Upon completion of the offering, the company, which will focus on commercial and industrial real estate, will consist of 19 properties, 16 of which represented the REIT’s legacy portfolio and three acquisitions.

Comment: REITs continue their inexorable progress to becoming the global structure of choice for owning real estate in the public equity capital markets.

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders continued to narrow week-over-week with financing available at attractive rates (5.25%+/-).

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	2/21/2011	2/28/2011	3/5/2011	3/11/2011
Office	342	214	191	188	183	182
Retail	326	207	179	177	175	171
Multifamily	318	188	163	159	159	156
Industrial	333	201	175	173	171	168
Average Asking Spread	330	203	177	174	172	169
10-Year Treasury	3.83%	3.29%	3.58%	3.48%	3.49%	3.40%
Source: Commercial Mortgage Alert; Trepp.

The Cushman & Wakefield Sonnenblick-Goldman Survey came in slightly over the past two weeks—we expect rates to remain at these levels barring a “shock” to the system for the foreseeable future.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages
	12/16/10	1/20/11	2/3/11	2/15/11	3/2/11
Multifamily - Non-Agency	+270	+250	+250	+250	+245
Multifamily – Agency	+280	+260	+255	+255	+250
Regional Mall	+280	+260	+260	+260	+260
Grocery Anchored	+280	+265	+265	+260	+260
Multi-Tenant Industrial	+270	+270	+270	+270	+265
CBD Office	+280	+260	+260	+260	+260
Suburban Office	+300	+270	+270	+270	+270
Full-Service Hotel	+320	+300	+300	+300	+300
Limited-Service Hotel	+400	+350	+330	+330	+325
5-Year Treasury	2.60%	2.05%	2.06%	2.36%	2.17%
Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages
	12/1610	1/20/11	2/3/11	2/15/11	3/2/11
Multifamily - Non-Agency	+190	+190	+190	+180	+180
Multifamily – Agency	+200	+195	+200	+190	+185
Regional Mall	+175	+180	+180	+180	+180
Grocery Anchor	+190	+185	+185	+185	+185
Multi-Tenant Industrial	+190	+190	+190	+190	+190
CBD Office	+180	+180	+180	+180	+180
Suburban Office	+190	+190	+190	+190	+190
Full-Service Hotel	+290	+250	+250	+240	+230
Limited-Service Hotel	+330	+280	+260	+260	+260
10-Year Treasury	3.47%	3.45%	3.46%	3.63%	3.47%
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	1/20/11	2/3/11	2/15/11	3/2/11
Multifamily – Non-Agency	+250-300	+225-300	+225-300	+225-300	+225-300
Multifamily- Agency	+300	+250-300	+250-300	+250-300	+250-300
Regional Mall	+275-300	+250-275	+250-275	+250-275	+225-275
Grocery Anchored	+275-300	+275-300	+250-300	+250-300	+225-275
Multi-Tenant Industrial	+250-350	+250-350	+250-350	+250-300	+250-350
CBD Office	+225-300	+250-300	+250-300	+250-300	+225-300
Suburban Office	+250-350	+275-350	+275-350	+275-350	+275-350
Full-Service Hotel	+300-450	+350-450	+350-400	+350-450	+350-450
Limited-Service Hotel	+450-600	+400-500	+400-500	+400-500	+400-500
1-Month LIBOR	0.26%	0.26%	0.26%	0.26%	0.26%
3-Month LIBOR	0.30%	0.30%	0.31%	0.31%	0.31%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +2.44%
S & P 500⁽²⁾:+1.63%
NASDAQ⁽³⁾: -0.42%
Russell 2000 ⁽⁴⁾:+0.68%
MSCI U.S. REIT ⁽⁵⁾:+1.99%
_____
^{(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	3/4/2011	3/12/2011	3/19/2011
3-Month	0.12%	0.11%	0.07%	0.06%
6-Month	0.18%	0.15%	0.13%	0.13%
2 Year	0.59%	0.68%	0.64%	0.58%
5 Year	2.01%	2.18%	2.06%	1.94%
10 Year	3.29%	3.49%	3.40%	3.27%
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.