Headlines
“[CMBS] Delinquencies Bounce Up In December”
According to Trepp LLC, commercial mortgage-backed securities delinquency rates increased 7 basis points (0.07%), to 9.58 percent, in December. Trepp predicts delinquencies rates could increase 75 basis points over the next six-to-12 months as the bulk of the five-year mortgages originated in 2007 mature and will require refinancing.
Simply put: the Class of 2007 were the last aggressively underwritten first mortgage loans before the market shut down in August 2007 (and commercial property values declined 44+/- percent and net operating incomes dropped like a rock). It is likely that a serious amount of maturing loans will not have NOIs sufficient to support refinancing and will require restructuring of some sort.
Therefore, opportunity knocks for those who have access to, or can mobilize, “Rescue Capital” which they can invest in exchange for a preferred interest in the property.
Monday’s Numbers
“And there off (to the races)!” The Trepp LLC survey, back from an extended holiday, shows little change from pre-yearend levels as lenders re-group and set their strategies for 2012. The only thing we’re are sure of [at this moment] is that underwriting will remain “strict and stringent” and that debt capital will be husbanded by lenders and used cautiously and carefully.
| 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 | 12/31/11 |
| Month Earlier |
| Office | 342 | 214 | 210 |
| 210 |
| Retail | 326 | 207 | 207 |
| 206 |
| Multifamily | 318 | 188 | 198 |
| 200 |
| Industrial | 333 | 201 | 205 |
| 205 |
|
|
|
|
|
|
|
| Average Spread | 330 | 203 | 205 |
| 205 |
|
|
|
|
|
|
|
| 10-Year Treasury | 3.83% | 3.29% | 1.88% |
| 2.06% |
The Cushman & Wakefield Sonnenblick-Goldman Survey shows rates “coming in” maybe five basis points.
|
Property Type | Mid-Point of Fixed Rate Commercial Mortgage Spreads For 5 Year Commercial Real Estate Mortgages | ||||
|
| 12/31/10 | 1/5/12 |
|
|
|
| Multifamily - Non-Agency | +270 | +245 |
|
|
|
| Multifamily – Agency | +280 | +255 |
|
|
|
| Regional Mall | +280 | +300 |
|
|
|
| Grocery Anchored | +280 | +295 |
|
|
|
| Strip and Power Centers |
| +320 |
|
|
|
| Multi-Tenant Industrial | +270 | +305 |
|
|
|
| CBD Office | +280 | +310 |
|
|
|
| Suburban Office | +300 | +320 |
|
|
|
| Full-Service Hotel | +320 | +350 |
|
|
|
| Limited-Service Hotel | +400 | +360 |
|
|
|
| 5-Year Treasury | 2.60% | 0.89% |
|
|
|
| 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 | 1/5/12 |
|
|
|
| Multifamily - Non-Agency | +190 | +205 |
|
|
|
| Multifamily – Agency | +200 | +200 |
|
|
|
| Regional Mall | +175 | +245 |
|
|
|
| Grocery Anchor | +190 | +240 |
|
|
|
| Strip and Power Centers |
| +255 |
|
|
|
| Multi-Tenant Industrial | +190 | +245 |
|
|
|
| CBD Office | +180 | +250 |
|
|
|
| Suburban Office | +190 | +265 |
|
|
|
| Full-Service Hotel | +290 | +300 |
|
|
|
| Limited-Service Hotel | +330 | +310 |
|
|
|
| 10-Year Treasury | 3.47% | 2.00% |
|
|
|
| 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 | 1/5/12 |
|
|
|
| Multifamily – Non-Agency | +250-300 | +200-250 |
|
|
|
| Multifamily- Agency | +300 | +220-265 |
|
|
|
| Regional Mall | +275-300 | +250-350 |
|
|
|
| Grocery Anchored | +275-300 | +240-325 |
|
|
|
| Strip and Power Centers |
| +250-350 |
|
|
|
| Multi-Tenant Industrial | +250-350 | +270-350 |
|
|
|
| CBD Office | +225-300 | +275-350 |
|
|
|
| Suburban Office | +250-350 | +300-350 |
|
|
|
| Full-Service Hotel | +300-450 | +375-475 |
|
|
|
| Limited-Service Hotel | +450-600 | +375-550 |
|
|
|
| 1-Month LIBOR | 0.26% | 0.30% |
|
|
|
| 3-Month LIBOR | 0.30% | 0.58% |
|
|
|
| * A dash (-) indicates a range. | |||||
| Source: Cushman & Wakefield Sonnenblick Goldman. | |||||
Year-to-Date Public Equity Capital Markets
DJIA (1): +1.17%
S & P 500 (2): +1.61%
NASDAQ (3): -2.65%
Russell 2000 (4):+1.25%
Morgan Stanley U.S. REIT (5):-0.30%
_____
(1) Dow JonesIndustrial Average. (2) Standard & Poor’s 500 Stock Index. (3) NASDComposite Index.
(4) SmallCapitalization segment of
| U.S. Treasury Yields | ||
|
| 12/31/10 | 12/31/11 |
| 3-Month | 0.12% | 0.01% |
| 6-Month | 0.18% | 0.06% |
| 2 Year | 0.59% | 0.24% |
| 5 Year | 2.01% | 0.83% |
| 10 Year | 3.29% | 1.88% |
