Monday’s Numbers: May 30, 2011

The Commercial Mortgage Alert Trepp weekly survey of 15 active portfolio lenders widened 5 to 10 basis points during the week, with all-in costs remaining in the 5.00+/- percent range.

May 31, 2011

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Headlines
“Fitch Sees CMBS Defaults Stabilizing; Cumulative Rate [of default] to Top 12 Percent”

Talk about mixed messages! I think what Fitch is saying is that the pace of defaults is slowing and we will reach the high-water mark—12 percent plus this year.

Monday’s Numbers

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders widened 5 to 10 basis points during the week, with all-in costs remaining in the 5.00+/- percent range.

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	5/20/11
Office	342	214	176
Retail	326	207	169
Multifamily	318	188	151
Industrial	333	201	166
Average Asking Spread	330	203	161
10-Year Treasury	3.83%	3.29%	3.15%

The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ended May 12 showed spreads narrowing 10 to 15 basis points and financing remaining 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	3/2/11	3/31/11	4/28/11	5/12/11
Multifamily - Non-Agency	+270	+245	+245	+230	+225
Multifamily – Agency	+280	+250	+250	+205	+200
Regional Mall	+280	+260	+260	+260	+255
Grocery Anchored	+280	+260	+260	+245	+245
Strip and Power Centers					+265
Multi-Tenant Industrial	+270	+265	+265	+245	+245
CBD Office	+280	+260	+260	+250	+250
Suburban Office	+300	+270	+270	+260	+260
Full-Service Hotel	+320	+300	+300	+280	+275
Limited-Service Hotel	+400	+325	+325	+320	+320
5-Year Treasury	2.60%	2.17%	2.23%	2.05%	1.88%
Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages
	12/1610	3/2/11	3/31/11	4/12/11	5/12/11
Multifamily - Non-Agency	+190	+180	+180	+180	+180
Multifamily – Agency	+200	+185	+185	+185	+175
Regional Mall	+175	+180	+180	+180	+180
Grocery Anchor	+190	+185	+185	+181	+175
Strip and Power Centers					+190
Multi-Tenant Industrial	+190	+190	+190	+190	+185
CBD Office	+180	+180	+180	+180	+180
Suburban Office	+190	+190	+190	+190	+190
Full-Service Hotel	+290	+230	+230	+230	+220
Limited-Service Hotel	+330	+260	+260	+240	+240
10-Year Treasury	3.47%	3.47%	3.45%	3.51%	3.22%
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	3/31/11	4/12/11	4/28/11	5/12/11
Multifamily – Non-Agency	+250-300	+225-300	+225-325	+225-315	+205-300
Multifamily- Agency	+300	+250-300	+250-310	+250-310	+225-310
Regional Mall	+275-300	+225-300	+225-300	+225-300	+200-275
Grocery Anchored	+275-300	+225-300	+225-300	+225-300	+210-285
Strip and Power Centers					+230-300
Multi-Tenant Industrial	+250-350	+250-350	+250-350	+250-350	+235-325
CBD Office	+225-300	+225-300	+225-300	+225-300	+225-300
Suburban Office	+250-350	+275-350	+275-350	+250-350	+250-350
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%	0.24%	0.22%	0.21%	0.20%
3-Month LIBOR	0.30%	0.30%	0.28%	0.27%	0.26%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +7.456%
S & P 500⁽²⁾:+5.84%
NASDAQ⁽³⁾: +5.43%
Russell 2000 ⁽⁴⁾:+6.68%
MSCI U.S. REIT ⁽⁵⁾:+10.78%

^{(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	5/27/2011
3-Month	0.12%	0.04%
6-Month	0.18%	0.10%
2 Year	0.59%	0.48%
5 Year	2.01%	1.72%
10 Year	3.29%	3.07%

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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.