Noteworthy News
Signs of the Times? For as many who say that the capital markets crises is easing or ending or whatever, there is daily evidence that things are not quite that rosy as shoe after shoe continues to drop. A number of this week’s shoes included the following:
Institutional Real Estate Investment
Weakening fundamentals, a troubled economy, the inability to finance and refinance real estate, and the re-calibrating of risk (among many factors) have taken their toll on real estate values and the performance of real estate investments including real estate investment funds. For example:
-
A pension fund reported that its real estate investments produced a -14.0% return for the second quarter 2009.
- A second pension fund reported its real estate portfolio produced a -6.2% return for the first quarter 2009.
- A third pension fund reported its real estate portfolio was down 42.68% for the 12-months ended June 30, 2009.
Monday’s Numbers
Year-to-Date Equity Market Performance (as of September 26, 2009):
DJIA(1): +10.13%
S & P 500(2): +15.62%
NASDAQ(3): +32.59%
Russell 2000(4): +19.92%
MSCI U.S. REIT(5): +10.49%
(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: (as of September 26, 2009)
3-month: 0.10%
6-month: 0.19%
2-Year: 0.98%
5-Year: 2.36%
10-Year: 3.32%
Commercial Mortgage Alert has added loan spreads to its weekly “Market Monitor” data page. The spreads are based upon a weekly survey of 15 active portfolio lenders conducted by Trepp, the analytics firm. Survey participants include: national banks, insurance companies, and finance companies.
| 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) | ||||
| 8/14 | 8/21 | 9/11 | 9/18 | |
| Office | 387 | 373 | 408 | 381 |
| Retail | 388 | 392 | 402 | 396 |
| Multifamily | 342 | 325 | 351 | 334 |
| Industrial | 373 | 358 | 392 | 373 |
| Source: Trepp | ||||
Indicated Spreads for Conventional Fixed and Floating Commercial Mortgages (as of September 1, 2009)
| Property Type | Mid-Point of Commercial Mortgage Rate Spreads for 5-10 Year Fixed-Rate Mortgages | ||||
| 6/29/09 | 7/14/09 | 7/29/09 | 8/20/09 | 9/1/09 | |
| Multifamily: Non-Agency | +280 | +340 | +350 | +400 | +425 |
| Multifamily: Agency | +265 | +210 | +220 | +220 | +240 |
| Regional Malls | +518 | +500 | +475 | +470 | +458 |
| Strip/Power Centers | +463 | +455 | +450 | +465 | +465 |
| Multi-Tenant Industrial | +460 | +450 | +463 | +475 | +488 |
| CBD Office | +455 | +420 | +420 | +443 | +460 |
| Suburban Office | +460 | +460 | +460 | +478 | +475 |
| Full-Service Hotel | +563 | +525 | +453 | +525 | +563 |
| Limited-Service Hotel | +588 | +588 | +550 | +550 | +575 |
| 5-Treasury | 2.76% | 2.33% | 2.70% | 2.65% | 2.47% |
| 10-Year Treasury | 3.50% | 3.44% | 3.69% | 3.46% | 3.45% |
| Source: Cushman & Wakefield Sonnenblick-Goldman, LLC. | |||||
| Property Type | Mid-Point of Floating Rate Commercial Mortgage Rate Spreads for 3-5 Year Fixed-Rate Mortgages | ||||
| 6/26/09 | 7/14/09 | 7/29/09 | 8/20/09 | 9/01/09 | |
| Multifamily: Non-Agency | +475 | +450 | +413 | +413 | +413 |
| Multifamily: Agency | NA | NA | NA | NA | NA |
| Regional Malls | +550 | +550 | +550 | +500 | +475 |
| Strip/Power Centers | +525 | +538 | +538 | +488 | +488 |
| Multi-Tenant Industrial | +475 | +488 | +488 | +488 | +413 |
| CBD Office | +500 | +513 | +525 | +488 | +375 |
| Suburban Office | +600 | +600 | +600 | +550 | +388 |
| Full-Service Hotel | +650 | +650 | +650 | +650 | +600 |
| Limited-Service Hotel | +725 | +725 | +725 | +725 | +650 |
| 1-Month LIBOR | 0.31% | 0.30% | 0.29% | 0.27% | 0.26% |
| 3-Month LIBOR | 0.61% | 0.54% | 0.49% | 0.43% | 0.38% |
| Source: Cushman & Wakefield Sonnenblick-Goldman, LLC. | |||||
