Monday’s Numbers: November 7, 2011

The Trepp LLC survey showed spreads coming in as much as 25 basis during the most recent survey period, evidence that the market, so far, is able to function with the Euro-crises playing out in the background.

November 7, 2011

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“Fed Requires Living Wills for Big Banks”

The Federal Reserve announced that it had signed off on a new rule requiring the nation’s largest banks to have “living wills” which would provide directional assistance in dismantling them if they failed. The rule had been previously approved by the FDIC. Banks with more than $50 billion in total assets will be subject to the rule.

“Equity REITs Advance in October”

According to the FTSE/NAREIT Equity REIT Index, equity REITs posted a total return of 14.28 percent in October; year-to-date, equity REITs are up 7.36 percent. The average dividend yield as of October 31 was 3.61 percent.

Monday’s Numbers

The Trepp LLC survey showed spreads continuing to narrow during the most recent survey period, evidence that the market sees mortgage lending as one of the the best ways to play out the Euro-crises.

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	10/28/11
Office	342	214	190
Retail	326	207	183
Multifamily	318	188	198
Industrial	333	201	190
Average Asking Spread	330	203	190
10-Year Treasury	3.83%	3.29%	2.29%

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⁾: +3.50%
S & P 500⁽²⁾-0.35%
NASDAQ⁽³⁾: +1.25%
Russell 2000 ⁽⁴⁾:-4.75%
MSCI U.S. REIT ⁽⁵⁾:+3.71%
_____
^{(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	11/05/11
3-Month	0.12%	0.01%
6-Month	0.18%	0.03%
2 Year	0.59%	0.22%
5 Year	2.01%	0.87%
10 Year	3.29%	2.03%

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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.