1. May 31, 2012
MARKET COMMENTARY
• Five- and ten-year U.S. Treasury rates hit historic lows this week as concerns about years, are already close to, or at, the 25% level with significant holdings in timber,
the European markets motivated investors to find safe havens for their capital. At the mining, real estate, etc...
same time, CMBS spreads have been under steady upward pressure and securitized
lenders have, hoping to avoid a reprise of 2011’s “summer swoon,” responded by • CMBS delinquency rates (30 days+) spiked another 24bp’s in May, settling at
widening lending quotes and underwriting more cautiously. 10.04% and breaking through the 10% barrier for the first time since the recession
began. May’s numbers are consistent with the trend we’ve been watching since
• JPM Asset Management is reportedly about to release a white paper suggesting December and reflect the continuing inability of many borrowers to refinance 5-year
that allocations to “real assets” (e.g., real estate, REIT shares, timber, infrastructure deals written in 2007. The significant increase is entirely driven by growing office
and commodities) should rise to 25% in the coming years. For most investment delinquency, which rose 67 basis points in April and is projected to rise again in May.
managers, real assets currently comprise 5-10% of total AUM. The change in strategy The good news is that all other asset classes – retail, lodging, multifamily and
is being driven by a desire for better yield, and the realization that the poor yields industrial -- continue to show moderate but steady improvement with delinquency
being offered in the fixed income market may not improve soon. Interestingly, many rates flat or slightly down month-over-month.
Canadian pension plans, which generally performed strongly during the past few
Subscribers to the Bloomberg Professional service can now access the C&W Capital Markets Update by typing CWSG<GO>. 18
2 3 4 5 8 10
RECENT DEALS/CLOSINGS/QUOTES – DEBT
Asset Type Type of Financing Type of Lender Rate/Return Loan-to-Value Term Amortization/Comments
Multifamily Fixed CMBS S + 290 75% 10 years 30 year
Hotel Fixed Bank 3.90% 50% 5 years 30 year
Industrial Fixed Life Company 4.31% 72% 20 years 20 year
Office Fixed Life Company 5.25% 75% 5 years 25 year
Multifamily - Const./Perm. Fixed Life Company 5.25% 65% (LTC) 10 years 30 year
Office Fixed Life Company 5.00% 55% 20 years 25 year
Retail Fixed CMBS 5.47% 67% 10 years 30 year
Retail - Mall Fixed CMBS 5.40% 64% 10 years 30 year
Retail - Mall Fixed CMBS 4.23% 51% 10 years IO, Ala Moana Center
Hotel - Mezzanine
Me anine Fi ed
Fixed REIT 12 00%
12.00% 63% 2 years plus one 12 month ext
12-month ext. IO 1% in and 1 5% o t
IO, 1.5% out
Hotel Floating REIT L + 720 79% 3 years plus two 12-month ext. IO, 1% in and 1% out
Retail - Condominium Fixed Life Company 4.50% 60% 5 years IO
Retail - Grocery Anchored Fixed Life Company 3.45% 65% 5 years 25 year
Retail - Grocery Anchored Fixed Life Company 3.85% 65% 10 years 25 year
Retail - Grocery Anchored Fixed CMBS 5.10% 72% 5 years 30 year
2 3 4 5 8 10
RECENT DEALS/CLOSINGS/QUOTES - EQUITY
Asset Type Type of Financing Type of Investor Target Return Equity Contribution Levels Comments
10% pref, 20% above 10%, 30% above 20%, 40%
Multi-Family Development JV Equity Hedge Fund 35% 85%/15%
above 30%
Mixed-Use Preferred Equity REIT 11% 100% Up to 75% LTV
Multi-Family Development JV Equity Insurance Company 22% 80%/20% 35% above 10%, 45% above 15%, 50% above 18%
Multi-Family Development JV Equity Opportunity Fund 22% 90%/10% 10% above 12%, 20% above 15%, 30% above 18%
Office Preferred Equity REIT 8% 100% Up to 65% LTV
SENIOR & SUBORDINATE LENDING SPREADS BASE RATES
Maximum Loan-to-Value DSCR Spreads May 31, 2012 Two Weeks Ago One Year Ago
Fixed Rate - 5 Years 65 - 70% 1.30 - 1.50 T + 210 - 425 30 Day LIBOR 0.24% 0.24% 0.19%
Fixed Rate - 10 Years 60 - 70%* 1.30 - 1.50 T + 190 - 375 U.S. Treasury
Floating Rate - 5 Years 5 Year 0.67% 0.74% 1.65%
Core Asset <65%* 1.30 - 1.50 L + 200 + 325 10 Year 1.58% 1.70% 3.02%
Value Add Asset <65%* 1.25 - 1.40 L + 325 - 500 Swaps Current Swap Spreads
Mezzanine Moderate Leverage 65 - 80% 1.05 - 1.15 L + 700 + 900 5 Year 1.01% 0.34%
Mezzanine High Leverage 75 - 90% L + 1000 + 1400 10 Year 1.74% 0.16%
* 65 - 70% for Multi-Family (non-agency); Libor floors at 0-1%
10-YEAR FIXED RATE RANGES BY ASSET CLASS Cushman & Wakefield's Equity, Debt and Structured Finance Group
Maximum Loan-to-Value Class A Class B/C has raised approximately $25 billion of capital from more than 125
Anchored Retail 70 - 75% T + 310 T + 320 capital sources for 270 transactions in the past five years. For more
Strip Center 65 - 70% T + 330 T + 345 information on this report or on how we can assist your financing
Multi-Family (non-agency) 70 - 75% T + 245 T + 250 needs or hospitality or note sales, please contact any of our offices or:
Multi-Family (agency) 75 - 80% T + 210 T + 215
Christopher T. Moyer
Distribution/Warehouse 65 - 70% T + 315 T + 330 Associate Director
R&D/Flex/Industrial 60 - 65% T + 325 T + 340 (212) 841-9220
Office 65 - 70% T + 305 T + 325 chris.moyer@cushwake.com
Full Service Hotel 55 - 65% T + 350 T + 375
* DSCR assumed to be greater than 1.35x
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