Monday’s Numbers: November 19, 2012

Roundtable Sees Little Movement in General Sentiment

The Real Estate Roundtable Sentiment Index is a survey of real estate industry senior executive officer’s confidence in the real estate industry. Based upon surveys from over 100 senior real estate executives, the quarterly survey measures “current and future outlook on three topics: (1) overall real estate conditions, (2) access to capital markets, and (3) real estate asset pricing”. If you are interested in reading the survey in its entirety, please visit the Real Estate Roundtable’s web site.

The following is a summary of the survey’s findings:

General Conditions: The Q4 Index saw little movement since Q3; all eyes are on the national elections as the air of uncertainty continued to strengthen within the commercial real estate market. Although general sentiment remains positive, participants acknowledge a gentle recovery and many forecast a slower incline for 2013.

Asset Values: Asset pricing remains strong for high-quality assets in top markets while a sluggish recovery tempers pricing for second tier real estate.

Capital Markets: Debt capital remains widely available as interest rates continue to compress; equity also remains plentiful.

Demand for Commercial Loans Increases

According to the Federal Reserve’s most recent Senior Loan Officer opinion survey (dated October 31^st), demand for commercial real estate loans increased to its highest level since early 1998; unfortunately, banks were not cooperating with fewer banks reporting loosening lending standards than in the prior quarter.

CMBS Delinquency Rate Drops to 8.3 Percent

According to Fitch, the percentage of securitized commercial mortgage loans 60 days past due declined to 8.29 percent as of October 31, 2012 from 8.37 percent as of September 30, 2012 and 8.56 percent at October 31, 2011. The delinquency level is now at its lowest level since December 2010 when it was 8.23 percent.

Overall, principal amount of the loans being resolved (and therefore removed from the index) is greater than the amount being added, an overall positive sign for the CMBS industry as it continues to deal with its legacy issues.

Monday’s Numbers

According to its most recent Trepp survey, spreads bounced around a little, ending the week basically unchanged week-over-week as the markets prepared for the foreshortened Thanksgiving week.

With the fiscal cliff still to be scaled, market participants seem to be resting in preparation for the mad dash to December 31^st.

All-in, mortgage rates remain incredibly attractive and seem likely to stay at this level until this year’s allocation is completely exhausted (or loan officers become completely exhausted).

The Cushman & Wakefield Equity, Debt, and Structured Finance Commercial Mortgage Spread monthly survey of commercial mortgage spreads showed spreads for 10-year, fixed rate mortgages, coming in approximately 15 basis points across all property sectors over the past 30 days.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +3.03%
S & P 500 ^(2): +8.13%
NASDAQ ⁽³⁾: +9.52%
Russell 2000 ⁽⁴⁾:+4.79%
Morgan Stanley U.S. REIT ⁽⁵⁾:+7.10%

^{(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.}