Monday’s Numbers: November 14, 2011

The Trepp LLC survey showed spreads widening 15+/- basis points during the most recent survey period, evidence that the debt market remains cautious and easily spooked by current events. Nevertheless, all-numbers are more than a little attractive.

November 14, 2011

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“CMBS Delinquencies Rise Again” [Scary October]

According to Trepp, the 30-day delinquency rate for commercial mortgage-backed securities increased by 21 basis points in October to 9.77%, its second highest level…ever! Need we say more?

Monday’s Numbers

The Trepp LLC survey showed spreads widening 15+/- basis points during the most recent survey period, evidence that the debt market remains cautious and easily spooked by current events. Nevertheless, all-numbers are more than a little attractive.

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	11/4/11
Office	342	214	212
Retail	326	207	206
Multifamily	318	188	196
Industrial	333	201	202
Average Asking Spread	330	203	204
10-Year Treasury	3.83%	3.29%	2.03%

The Cushman & Wakefield Sonnenblick-Goldman Survey for the period ending November 3^rd showed spreads for 10-year mortgages basically unchanged, i.e., up five basis points here, down five basis points there.

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	11/3/11
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	+300
Strip and Power Centers			+270	+310	+320
Multi-Tenant Industrial	+270	+265	+255	+295	+315
CBD Office	+280	+260	+255	+290	+315
Suburban Office	+300	+270	+270	+310	+330
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%	0.93%
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	11/3/11
Multifamily - Non-Agency	+190	+180	+185	+240	+240
Multifamily – Agency	+200	+185	+175	+235	+235
Regional Mall	+175	+180	+190	+250	+255
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	+255
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%	2.05%
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	11/3/11
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	+210-275
Grocery Anchored	+275-300	+225-300	+205-275	+215-275	+205-275
Strip and Power Centers			+225-300	+225-300	+220-300
Multi-Tenant Industrial	+250-350	+250-350	+230-325	+250-325	+250-325
CBD Office	+225-300	+225-300	+215-300	+240-300	+230-300
Suburban Office	+250-350	+275-350	+250-325	+265-325	+250-325
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%	0.25%
3-Month LIBOR	0.30%	0.28%	0.25%	0.37%	0.44%
* A dash (-) indicates a range.
Source: Cushman & Wakefield Sonnenblick Goldman.

Year-to-Date Public Equity Capital Markets

DJIA ⁽¹⁾: +4.98%
S & P 500⁽²⁾+0.49%
NASDAQ⁽³⁾: +0.98%
Russell 2000 ⁽⁴⁾:-4.96%
MSCI U.S. REIT ⁽⁵⁾:+3.09%

^{(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	11/12/11
3-Month	0.12%	0.00%
6-Month	0.18%	0.02%
2 Year	0.59%	0.23%
5 Year	2.01%	0.91%
10 Year	3.29%	2.06%

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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.