Headlines
“Bank Failures in August Decline”
According to Trepp LLC, seven banks failed in August as compared to 13 in July; total failures in 2011 have reached 68, putting the U.S. on track to record 100+/- failures this year.
Georgia leads the nation in bank failures this year (17) and in the current cycle (beginning in mid-207) with 69. Florida ranks second with 10 failures year-to-date and 55 in the current cycle.
“Equity REITs Performance Negative in August”
According to the FTSE NAREIT Equity REIT Index, equity REITs posted total returns of -5.60 percent in August as compared to +1.05 percent in July. Year-to-date, equity REITs are down 5.53 percent. Dividends for the August period averaged 3.65 percent.
Winners in August: free standing retail (+5.07 percent), manufactured homes (+3.86 percent), and self-storage (+2.87 percent).
Losers in August: hotels (-23.50 percent), industrial (-21.23 percent), and office (-7.43 percent).
CMBS 2.0 Conduit Spreads as of August 31, 2011 | ||||
Fixed Rate | Priced as Spread over | August 31 | 3 Months Earlier | 6 Months Earlier |
AAA (5 Year) | 10-Year Swaps | 186 | 122 | 112 |
AAA (10-Year) | 10-Year Swaps | 211 | 153 | 140 |
AA (10-Year) | 10-Year Swaps | 337 | 231 | 215 |
A (10 Year) | 10-Year Swaps | 419 | 280 | 258 |
BBB (10-Year) | 10-Year Treasury | 651 | 395 | 368 |
BBB- (10 Year) | 10-Year Treasury | 659 | 403 | 373 |
Benchmarks as of August 31st: 10-year Treasury Bonds = 2.232%; 10-year Interest Rate Swaps = 2.412% | ||||
Source: Trepp LLC. | ||||
Monday’s Numbers
The Trepp LLC survey showed spreads basically unchanged, reflecting a wait (until after Labor Day) and see attitude. So, we will wait to see what if anything happened during the first weeks of September.
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 | 9/2/11 |
Office | 342 | 214 | 221 |
Retail | 326 | 207 | 211 |
Multifamily | 318 | 188 | 205 |
Industrial | 333 | 201 | 210 |
Average Asking Spread | 330 | 203 | 207 |
10-Year Treasury | 3.83% | 3.29% | 2.25% |
We expect the Cushman & Wakefield Sonnenblick-Goldman Survey will be updated next week.
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): -5.06%
S & P 500 (2):-8.22%
NASDAQ (3): -6.97%
Russell 2000 (4):-13.91%
MSCI U.S. REIT (5):-1.32%
(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 | 9/10/2011 | |
3-Month | 0.12% | 0.01% |
6-Month | 0.18% | 0.04% |
2 Year | 0.59% | 0.17% |
5 Year | 2.01% | 0.80% |
10 Year | 3.29% | 1.92% |
