Monday’s Numbers: May 21, 2012

The Trepp LLC survey showed spreads unchanged during the most recent survey period as the markets spent the week either waiting on the Facebook initial public offering or the imminent default on its obligations by some or all of the southern portion of Europe.

May 21, 2012

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The following is a ranking by PERE (a firm specializing in the analysis of real estate investment funds) of capital raised ($178.396 billion) by real estate private equity funds.

Current Rank	Firm	Capital Raised ($Billion)	Prior Rank
1	The Blackstone Group	$29.100	1
2	Morgan Stanley Real Estate Investing	12.667	2
3	Goldman Sachs Real Estate Principal Investment Area	12.124	5
4	Tishman Speyer	12.104	3
5	Colony Capital	11.654	4
6	The Carlyle Group	9.639	8
7	Lone Star Funds	7.900	10
8	Beacon Capital Partners	6.580	6
9	Westbrook Partners	6.025	11
10	LaSalle Investment Management	5.864	7
11	MGPA	5.426	13
12	Starwood Capital Group	4.595	21
13	CBRE Global Investors	4.035	15
14	AREA Property Partners	3.963	12
15	Prudential Real Estate Investors	3.959	9
16	TA Associates Realty	3.782	23
17	Angelo, Gordon & Co.	3.683	28
18	Rockpoint Group	3.567	17
19	Shorenstein Properties	3.295	16
20	Bank of America Merrill Lynch Principal Investments	3.261	22
21	AEW Global	2.871	---
22	Hines	2.867	29
23	Brookfield Asset Management	2.728	---
24	Lubert-Adler Partners	2.604	18
25	JER Partners	2.496	---
26	Grove International Partners	2.464	30
27	GIM Group	2.371	---
28	Northwood Investors	2.310	---
29	DRA Advisors	2.250	---
30	Walton Street Capital	2.212	20
	Total	$178.396

According to a data from Cushman & Wakefield, spreads on all mezzanine loans have tightened substantially (100 to 200 basis points) as capital sources are focusing on the higher yields offered by investment in the sector. We think spreads will continue to narrow as the “Wall of Capital” waiting to be invested becomes increasingly restive.

Investors	January	February	March	April	May
Hedge/Opportunity Funds	10-15%	10-15%	9-15%	9%-14%	9-14%
Investment Banks	9%-15%	9%-15%	9%-14%	9%-13%	9%-14%
Pension Funds, REITs, Life Insurers	7%-12%	8%-12%	7%-12%	7%-12%	7%-12%
Private Sources	8%-16%	8%-16%	7%-15%	7%-14%	7%-14%

Monday’s Numbers

The Trepp LLC survey showed spreads unchanged during the most recent survey period as the markets spent the week either waiting on the Facebook initial public offering or the imminent default on its obligations by some or all of the southern portion of Europe. Average spreads of 212 basis points over “sub-2” percent 10-year U.S. Treasury bonds remains attractive.

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	5/11/12	Month Earlier
Office	342	214	210	220	206
Retail	326	207	207	213	195
Multifamily	318	188	198	203	184
Industrial	333	201	205	210	189
Average Spread	330	203	205	212	194
10-Year Treasury	3.83%	3.29%	1.88%	1.76%	1.99%

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages
	12/31/10	1/26/12	2/28/12	3/28/12	4/27/12
Multifamily - Non-Agency	+270	+240	+240	+230	+240
Multifamily – Agency	+280	+245	+210	+195	+200
Regional Mall	+280	+300	+300	+275	+275
Grocery Anchored	+280	+295	+290	+270	+270
Strip and Power Centers		+320	+315	+295	+295
Multi-Tenant Industrial	+270	+305	+310	+310	+285
CBD Office	+280	+310	+310	+295	+270
Suburban Office	+300	+320	+320	+310	+290
Full-Service Hotel	+320	+350	+350	+350	+340
Limited-Service Hotel	+400	+360	+360	+360	+350
5-Year Treasury	2.60%	0.89%	0.78%	0.83%	0.83%
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	1/26/12	2/28/12	3/28/12	4/27/12
Multifamily - Non-Agency	+190	+210	+210	+200	+210
Multifamily – Agency	+200	+205	+180	+165	+170
Regional Mall	+175	+245	+235	+275	+220
Grocery Anchor	+190	+240	+230	+270	+200
Strip and Power Centers		+255	+250	+290	+235
Multi-Tenant Industrial	+190	+255	+250	+280	+240
CBD Office	+180	+240	+320	+270	+220
Suburban Office	+190	+260	+250	+290	+245
Full-Service Hotel	+290	+290	+290	+325	+260
Limited-Service Hotel	+330	+315	+315	+345	+290
10-Year Treasury	3.47%	1.97%	1.90%	2.21%	1.95%
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	1/26/12	2/28/12	3/28/12	4/27/12
Multifamily – Non-Agency	+250-300	+200-250	+200-250	+200-250	+200-250
Multifamily- Agency	+300	+220-265	+220-265	+220-265	+220-265
Regional Mall	+275-300	+210-265	+200-265	+200-265	+200-265
Grocery Anchored	+275-300	+200-275	+200-275	+200-275	+200-275
Strip and Power Centers		+225-300	+225-300	+225-300	+225-300
Multi-Tenant Industrial	+250-350	+225-305	+225-305	+225-305	+225-305
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	+350-425	+275-400	+275-400	+250-400
Limited-Service Hotel	+450-600	+400-500	+350-550	+325-450	+325-450
1-Month LIBOR	0.26%	0.27%	0.24%	0.24%	0.24%
3-Month LIBOR	0.30%	0.55%	0.49%	0.47%	0.47%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +1.46%
S & P 500^(2):+2.99%
NASDAQ⁽³⁾: +6.67%
Russell 2000 ⁽⁴⁾:+0.86%
Morgan Stanley U.S. REIT ⁽⁵⁾:+4.88%
_____
^{(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	5/19/2012
3-Month	0.12%	0.01%	0.08%
6-Month	0.18%	0.06%	0.14%
2 Year	0.59%	0.24%	0.29%
5 Year	2.01%	0.83%	0.75%
7 Year			1.16%
10 Year	3.29%	1.88%	1.72%

Key Rates (in Percentages)
	Current	1 Mo. Prior	3 Mo. Prior	6 Mo. Prior	1 Yr. Prior
Fed Funds Rate	0.15	0.16	0.11	0.08	0.11
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	8.10	8.20	8.30	8.90	9.00
1-Month Libor	0.24	0.24	0.25	0.26	0.20
3-Month Libor	0.47	0.47	0.49	0.49	0.26

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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.