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. |