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Data center real estate investment trusts (REITs) have been the best-performing sector over the past two years, posting total returns of 28.36 percent in 2015 and 26.41 percent in 2016. Once considered a fringe sector, data centers have charged onto the center stage as internet use and data consumption have skyrocketed. But data centers are also proving to be one of the sectors most sensitive to interest rates: returns stumbled late in 2016 before making a recovery in December. Plus, interest rate survey data from Trepp.

New Energy Star building performance metrics being applied on August 27 by the U.S. Environmental Protection Agency could lower the score of almost every building participating in the program, which encompasses over half of commercial real estate building floor space in the United States. This will cause some to fall below the 75-point level needed to achieve certification through the program.

The Trepp LLC survey showed spreads continuing at current levels as everyone appears focused on an array of non-real estate factors and events such as the Federal Reserve doing the “Twist”, Euro-financial market confusion, and Sovereign risk, to name a few. Deals are continuing to get done at slightly wider spreads.

The Commercial Mortgage Alert Trepp weekly survey of 15 active portfolio lenders continued to narrow week-over-week with financing available at attractive rates (5.25%+/-). The Cushman & Wakefield Sonnenblick-Goldman Survey came in slightly over the past two weeks—we expect rates to remain at these levels barring a “shock” to the system for the foreseeable future.

The Commercial Mortgage Alert Trepp weekly survey of 15 active portfolio lenders narrowed over the reporting period with average rates now closer to 5.0%. The Cushman & Wakefield Sonnenblick-Goldman survey ended March literally where it started with spreads in the 250 basis point range (for 5-year loans) and 185 basis point range (for 10-year loans).

The past week was very quiet; volatile as usual, but very quiet. There was little to report: some deals funded; some properties were turned over to their special services; some deals went under contract; some fell out of contract; and some closed.

The Commercial Mortgage Alert Trepp weekly survey of 15 active portfolio lenders narrowed significantly (17 basis points on average) with multifamily spreads breaking the 200 basis point barrier between sanity and complete madness. Less than 200 over the 10-year curve seems a little too low a spread to compensate for the risks associated with making a loan secured by an operating business. During the period, 10-year Treasury bond yields were flat, with average all-in cost equal to 4.66 percent.

The Commercial Mortgage Alert Trepp weekly survey of 15 active portfolio lenders came in slightly during the most recent survey period. During the period, 10-year Treasury bond yields were unchanged. There seems to be an all-in cost of 5.0% “glass ceiling” in place. For the survey period, average all-in cost equaled 5.02%, the “present” glass ceiling. Not much is expected to happen during the next two weeks so we’ll sit on the sidelines and wait for January’s allocation to re-fill lender’s coffers.

The Commercial Mortgage Alert Trepp weekly survey of 15 active portfolio lenders widened slightly during the most recent survey period. It’s year-end, and lender’s are starting to focus on next year’s allocations. If it’s a typical start, rates will be up slightly as lenders test the waters as to what spreads will work and what borrowers” will accept. We’ll see if the current glass ceiling of 5.0 percent holds or if it’s off to the races in 2011.

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