Monday’s Numbers: December 19, 2011

According to Jones Lang LaSalle’s 2012 National Commercial Real Estate Outlook, the U.S. commercial real estate market will see slow growth in 2012 with a projected increase in transaction volume of 15 percent to 20 percent. Distribution and ports are expected to lead the recovery in the industrial sector while growth in the hotel sector, though slow, is expected to be driven by buy-side demand from private equity funds.

December 19, 2011

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“Slow growth in 2012”

According to Jones Lang LaSalle’s 2012 National Commercial Real Estate Outlook, the U.S. commercial real estate market will see slow growth in 2012 with a projected increase in transaction volume of 15 percent to 20 percent. Distribution and ports are expected to lead the recovery in the industrial sector while growth in the hotel sector, though slow, is expected to be driven by buy-side demand from private equity funds.

Monday’s Numbers

The Trepp LLC survey showed spreads narrowing a few basis points across all property types as the markets start to shut-down for the balance of 2111.

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	12/9/11
Office	342	214	206
Retail	326	207	206
Multifamily	318	188	196
Industrial	333	201	201
Average Asking Spread	330	203	202
10-Year Treasury	3.83%	3.29%	2.06%

The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ending December 1, 2011 showed spreads for 10-year mortgages unchanged.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages
	12/31/10	3/31/11	6/30/11	9/30/11	12/1/11
Multifamily - Non-Agency	+270	+245	+230	+250	+265
Multifamily – Agency	+280	+250	+210	+255	+255
Regional Mall	+280	+260	+265	+300	+310
Grocery Anchored	+280	+260	+250	+290	+295
Strip and Power Centers			+270	+310	+320
Multi-Tenant Industrial	+270	+265	+255	+295	+310
CBD Office	+280	+260	+255	+290	+310
Suburban Office	+300	+270	+270	+310	+325
Full-Service Hotel	+320	+300	+275	+335	+350
Limited-Service Hotel	+400	+325	+310	+345	+360
5-Year Treasury	2.60%	2.23%	1.52%	0.99%	0.98%
Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type	Mid-Point of Fixed Rate Commercial Mortgage Spreads For 10 Year Commercial Real Estate Mortgages
	12/31/10	3/31/11	6/30/11	9/30/11	12/1/11
Multifamily - Non-Agency	+190	+180	+185	+240	+240
Multifamily – Agency	+200	+185	+175	+235	+235
Regional Mall	+175	+180	+190	+250	+250
Grocery Anchor	+190	+185	+200	+240	+245
Strip and Power Centers			+195	+255	+260
Multi-Tenant Industrial	+190	+190	+190	+250	+245
CBD Office	+180	+180	+190	+250	+250
Suburban Office	+190	+190	+195	+255	+265
Full-Service Hotel	+290	+230	+225	+300	+300
Limited-Service Hotel	+330	+260	+245	+325	+305
10-Year Treasury	3.47%	3.45%	2.94%	2.01%	2.13%
Source: Cushman & Wakefield Sonnenblick Goldman.

Property Type	Mid-Point of Floating-Rate Commercial Mortgage Spreads For 3 - 5 Commercial Real Estate Year Mortgages
	12/31/10	3/31/11	6/30/11	9/30/11	12/1/11
Multifamily – Non-Agency	+250-300	+225-325	+200-260	+225-250	+200-250
Multifamily- Agency	+300	+250-310	+220-260	+230-265	+220-265
Regional Mall	+275-300	+225-300	+205-270	+225-275	+215-275
Grocery Anchored	+275-300	+225-300	+205-275	+215-275	+210-275
Strip and Power Centers			+225-300	+225-300	+220-300
Multi-Tenant Industrial	+250-350	+250-350	+230-325	+250-325	+225-325
CBD Office	+225-300	+225-300	+215-300	+240-300	+225-300
Suburban Office	+250-350	+275-350	+250-325	+265-325	+245-325
Full-Service Hotel	+300-450	+350-450	+350-450	+350-450	+350-425
Limited-Service Hotel	+450-600	+400-500	+400-500	+400-500	+400-500
1-Month LIBOR	0.26%	0.22%	0.19%	0.24%	0.27%
3-Month LIBOR	0.30%	0.28%	0.25%	0.37%	0.53%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +2.50%
S & P 500⁽²⁾-03.02%
NASDAQ⁽³⁾: -3.68%
Russell 2000 ⁽⁴⁾:-7.68%
Morgan Stanley U.S. REIT ⁽⁵⁾:+4.87%
_____
^{(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	12/17/11
3-Month	0.12%	-0.01%
6-Month	0.18%	0.03%
2 Year	0.59%	0.22%
5 Year	2.01%	0.80%
10 Year	3.29%	1.85%

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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.