Monday’s Numbers: November 22, 2010

The Commercial Mortgage Alert Trepp weekly survey of 15 active portfolio lenders narrowed slightly in response to widening in the yield of 10-year Treasury bonds. There seems to be an all-in cost of 5.0% “glass ceiling” in place as loan spreads moved in and Treasury spreads widened to accommodate changes in spreads and/or yields. For the survey period, average all-in cost equaled 4.87 percent.

November 22, 2010

Facebook
Twitter
LinkedIn
Print
Copy
Link copied
Email

The Commercial Mortgage Alert Trepp weekly survey (below) of 15 active portfolio lenders narrowed slightly in response to widening in the yield of 10-year Treasury bonds. There seems to be an all-in cost of 5.0% “glass ceiling” in place as loan spreads moved in and Treasury spreads widened to accommodate changes in spreads and/or yields. For the survey period, average all-in cost equaled 4.87 percent.

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	10/15	10/22	10/29	11/5	11/12
Office	342	248	244	253	228	221
Retail	326	233	230	234	213	209
Multifamily	318	207	212	205	198	195
Industrial	333	231	229	226	211	206

Average Asking Spread	330	231	229	230	213	208

10-Year Treasury	3.83%	2.55%	2.60%	2.53%	2.53%	2.79%
Source: Commercial Mortgage Alert; Trepp.

Changes in spreads in the November 11^th Cushman & Wakefield Sonnenblick-Goldman fixed and floating mortgage rate survey (below) mixed and property sector specific with all-in costs supporting our 10-year term, 5.0 percent, glass ceiling thesis.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages
	1/6/10	9/16/10	10/13/10	10/27/10	11/11/10
Multifamily - Non-Agency	+360	+280	+280	+280	+280
Multifamily – Agency	+220	+240	+240	+250	+280
Regional Mall	+450	+290	+280	+290	+305
Strip/Power Center	+460	+300	+285	+295	+280
Multi-Tenant Industrial	+435	+280	+275	+275	+280
CBD Office	+435	+270	+270	+270	+280
Suburban Office	+465	+300	+300	+300	+300
Full-Service Hotel	+500	+400	+375	+375	+350
Limited-Service Hotel	+500	+450	+450	+450	+425
5-Year Treasury	2.60%	1.51%	1.17%	1.14%	1.11%
Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages
	1/6/10	9/16/10	10/13/10	10/27/10	11/11/10
Multifamily - Non-Agency	+300	+180	+180	+180	+180
Multifamily – Agency	+220	+190	+190	+190	+190
Regional Mall	+350	+200	+200	+200	+215
Strip/Power Center	+350	+200	+200	+205	+220
Multi-Tenant Industrial	+420	+200	+190	+190	+190
CBD Office	+330	+190	+190	+190	+190
Suburban Office	+355	+220	+220	+220	+200
Full-Service Hotel	+550	+350	+340	+340	+335
Limited-Service Hotel	+575	+380	+380	+380	+350
10-Year Treasury	3.85%	2.76%	2.45%	2.71%	2.72%
Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type	Mid-Point of Floating-Rate Commercial Mortgage Spreads For 3 - 5 Commercial Real Estate Year Mortgages
	1/6/10	9/16/10	10/13/10	10/27/10	11/11/10
Multifamily – Non-Agency	+300 – 400	+275-325	+250-300	+275-325	+250-300
Multifamily- Agency	NA	NA	NA	NA	300
Regional Mall	+475 – 600	+275-350	+275-350	+275-350	+275-350
Strip/Power Center	+450 – 650	+275-350	+275-350	+275-350	+275-350
Multi-Tenant Industrial	+400 – 500	+250-350	+250-350	+250-350	+250-350
CBD Office	+425	+225-300	+225-300	+225-300	+225-300
Suburban Office	+425	+250-350	+250-350	+250-350	+250-350
Full-Service Hotel	+600	+375-500	+375-500	+375-500	+375-500
Limited-Service Hotel	+750	+450-550	+450-600	+450-600	+450-600
1-Month LIBOR	0.23%	0.26%	0.26%	0.26%	0.25%
3-Month LIBOR	0.25%	0.31%	0.29%	0.29%	0.29%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +7.44%
S & P 500⁽²⁾:+7.59%
NASDAQ⁽³⁾: +10.97%
Russell 2000 ⁽⁴⁾: +15.83%
MSCI U.S. REIT ⁽⁵⁾:+21.56%

^{(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
	1/6/10	4/9/10	9/30/10	11/21/10
3-Month	.016%	0.15%	0.15%	0.15%
6-Month	0.25%	0.23%	0.19%	0.18%
2 Year	0.99%	1.06%	0.41%	0.50%
5 Year	2.60%	2.62%	1.26%	1.52%
10 Year	3.85%	3.88%	2.51%	2.87%
Source: Bloomberg LLP.

Facebook
Twitter
LinkedIn
Print
Copy
Link copied
Email

Public

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.