Monday’s Numbers: December 1, 2014

The Trepp survey was not conducted last week due to the Thanksgiving holiday. If the survey had been conducted, it most likely would have shown a decline in average spreads of 10 to 15 basis points, mirroring the recent decline in yields on ten-year Treasury bonds, which closed at 2.18 percent on November 28.

December 1, 2014

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The Trepp survey was not conducted last week due to the Thanksgiving holiday; the following matrix is for the week ended November 14. If the survey had been conducted, it most likely would have shown a decline in average spreads of 10 to 15 basis points, mirroring the recent decline in yields on ten-year Treasury bonds, which closed at 2.18 percent on November 28, as well as declines of 13 basis points for the week and 82 basis points year-to-date.

Asking Spreads over U.S. Ten-Year Treasury Bonds in Basis Points (Ten-year commercial and multifamily mortgage loans for properties with 50% to 59% loan-to-value ratios)
	12/31/10	12/31/11	12/31/12	12/31/13	This week (11/14/14)	Last week (11/7/14)	Month earlier
Office	214	210	210	162	149	148	149
Retail	207	207	192	160	141	139	140
Multifamily	188	202	182	157	138	135	136
Industrial	201	205	191	159	141	139	140
Average spread	203	205	194	160	142	140	140
10-year Treasury	3.29%	2.88%	1.64%	3.04%	2.32%	2.38%	2.21%

The Cushman & Wakefield Equity, Debt, and Structured Finance Group’s monthly Capital Markets Update of commercial real estate mortgage spreads dated November 6 shows no change in required spreads as compared to the previous survey period.

30-Year Fixed-Rate Commercial Real Estate Mortgages (as of November 6, 2014)
Property	Maximum loan-to-value	Class A	Class B/C
Multifamily (agency)	75–80%	T +160	T +170
Multifamily (nonagency)	70–75%	T +170	T +165
Anchored retail	70–75%	T +185	T +195
Strip center	65–70%	T +185	T +195
Distribution/warehouse	65–70%	T +185	T +195
R&D/flex/industrial	65–70%	T +190	T +200
Office	65–75%	T +180	T +190
Full-service hotel	55–65%	T +235	T + 255
Debt-service-coverage ratio assumed to be greater than 1.35 to 1.

Year-to-Date Public Equity Capital Markets

Dow Jones Industrial Average: +7.55%

Standard & Poor’s 500 Stock Index: +11.86%

NASD Composite Index (NASDAQ): +14.73%

Russell 2000: +0.82%

Morgan Stanley U.S. REIT Index: +20.66%

Year-to-Date Global CMBS Issuance (in $ Billions as of 11/28/14)
	2014	2013
U.S.	$81.5	$77.8
Non-U.S.	4.5	11.7
Total	$85.9	$89.6
Source: Commercial Mortgage Alert.

Year-to-Date U.S. Treasury Yields

	12/31/12	12/31/13	11/28/14
3-month	0.08%	0.07%	0.04%
6-month	0.12%	0.10%	0.07%
2-year	0.27%	0.38%	0.52%
5-year	0.76%	1.75%	1.56%
7-year	1.25%	2.45%	1.89%
10-year	1.86%	3.04%	2.18%

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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.