Monday’s Numbers: August 29, 2011

Due to earthquakes, hurricanes, and vacation schedules, the Trepp LLC survey will not be updated until after Labor Day. An informal survey we conducted this week showed most borrowers and lenders waiting for things to “just settle down.” We understand some insurance companies are considering instituting “Floor Pricing” but we’ve seen no official policy statements so far.

August 29, 2011

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“FDIC’s List of ‘Problem’ Banks Drops for First Time Since 2006”

The Federal Deposit Insurance Corporation’s supposedly confidential list of banks considered at risk of failing included 865 banks as of June 30, 2011, a decrease of 23 since the prior quarter. ”Banks have continued to make gradual but steady progress in recovering from the financial market turmoil and severe recession that unfolded from 2007 through 2009,” said Martin Gruenberg, acting chairman of the FDIC.

Monday’s Numbers

Due to earthquakes, hurricanes, and vacation schedules, the Trepp LLC survey will not be updated until after Labor Day. An informal survey we conducted this week showed most borrowers and lenders waiting for things to “just settle down.” We understand some insurance companies are considering instituting “Floor Pricing” but we’ve seen no official policy statements so far.

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	8/12/11
Office	342	214	217
Retail	326	207	209
Multifamily	318	188	197
Industrial	333	201	206
Average Asking Spread	330	203	207
10-Year Treasury	3.83%	3.29%	2.25%

The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ended August 24^th showed 5-year fixed rate spreads relatively unchanged with 10-year fixed rates spreads widening as much as 15 basis points; floating rate spreads were basically unchanged.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages
	12/16/10	3/31/11	7/28/11	8/11/11	8/24/11
Multifamily - Non-Agency	+270	+245	+250	+255	+265
Multifamily – Agency	+280	+250	+240	+265	+250
Regional Mall	+280	+260	+280	+290	+290
Grocery Anchored	+280	+260	+270	+285	+285
Strip and Power Centers			+290	+300	+300
Multi-Tenant Industrial	+270	+265	+275	+295	+285
CBD Office	+280	+260	+275	+290	+290
Suburban Office	+300	+270	+295	+300	+300
Full-Service Hotel	+320	+300	+230	+320	+320
Limited-Service Hotel	+400	+325	+320	+340	+340
5-Year Treasury	2.60%	2.23%	1.49%	0.97%	0.96%
Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages
	12/1610	3/31/11	7/28/11	8/11/11	8/24/11
Multifamily - Non-Agency	+190	+180	+195	+240	+240
Multifamily – Agency	+200	+185	+190	+245	+230
Regional Mall	+175	+180	+205	+240	+255
Grocery Anchor	+190	+185	+195	+230	+250
Strip and Power Centers			+210	+250	+260
Multi-Tenant Industrial	+190	+190	+230	+240	+250
CBD Office	+180	+180	+225	+240	+255
Suburban Office	+190	+190	+235	+260	+260
Full-Service Hotel	+290	+230	+250	+275	+275
Limited-Service Hotel	+330	+260	+270	+295	+280
10-Year Treasury	3.47%	3.45%	2.97%	2.23%	2.16%
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	8/11/11	7/28/11	824/11
Multifamily – Non-Agency	+250-300	+225-325	+220-260	+200-250	+220-260
Multifamily- Agency	+300	+250-310	+230-270	+220-260	+230-270
Regional Mall	+275-300	+225-300	+220-270	+205-270	+220-270
Grocery Anchored	+275-300	+225-300	+210-275	+205-275	+210-275
Strip and Power Centers			+235-300	+225-300	+235-300
Multi-Tenant Industrial	+250-350	+250-350	+250-325	+230-325	+250-325
CBD Office	+225-300	+225-300	+235-300	+225-300	+235-300
Suburban Office	+250-350	+275-350	+265-325	+250-325	+265-325
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%	0.22%	0.21%	0.19%	0.22%
3-Month LIBOR	0.30%	0.28%	0.29%	0.25%	0.31%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: -2.53%
S & P 500⁽²⁾:-6.43%
NASDAQ⁽³⁾: -6.52%
Russell 2000 ⁽⁴⁾:-11.75%
MSCI U.S. REIT ⁽⁵⁾:-1.16%

^{(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	8/26/2011
3-Month	0.12%	-0.01%
6-Month	0.18%	0.02%
2 Year	0.59%	0.19%
5 Year	2.01%	0.94%
10 Year	3.29%	2.19%

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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.