1. September 6, 2012
MARKET COMMENTARY
• Apparently, even the Greeks were tired of being in the limelight, which helped the • Delinquency rates for CMBS moved higher in July, with Trepp reporting that the
financing markets avoid another summer meltdown and allowed the market to build 30+ day delinquency rate had inched up 18bps to 10.34%. Surprisingly, despite the
some momentum going into the fourth quarter. CMBS lenders are reporting strong strong MF fundamentals we’re seeing in many markets and the easy access to GSE
origination volume and seem more comfortable than any time in the past few years financing at record low rates, the delinquency numbers for MF properties are the
that they will be able to book profits on the deals they’ve been warehousing. Spreads worst of any major asset class with delinquency rates for MF climbing to 15.69%.
tightened steadily through July and August, though the market gave back about 5bps The best performing asset class is retail, where strengthening consumer spending
in spreads during the last two weeks. combined with the early wash-out of the sector’s weakest tenants, has helped retail
assets relative to the office and industrial sectors.
• We are halfway through the digestion period for the super-bubble of CRE loan
maturities that began in 2009 and is projected to peak in 2013. The good news is that • The investor flight to quality in gateway cities has led to prices in major markets
CRE maturities decline significantly after 2013, with a smaller spike in 2016-17 recovering more than twice as quickly as those in non-major markets. However, non-
comprised of 10-year deals originated in 2006 and 2007. The bad news is that the major markets saw greater price appreciation over the last month, three- month and
lending volume in the securitization market has not recovered to a level sufficient to 12-month periods, as investors continue to look beyond gateway markets in their
fill the refinancing gap, which means that special servicers will continue to be very quest for higher yields.
busy for the next 18-24 months.
Subscribers to the Bloomberg Professional service can now access the C&W EDSF Capital Markets 10
2 3 4 5 8 Update by typing CWSG<GO>.
18
RECENT DEALS/CLOSINGS/QUOTES – DEBT
Asset Type Type of Financing Type of Lender Rate/Return Loan-to-Value Term Amortization/Comments
Office Fixed Life Company 3.50% 55% 7 years 30 year
Office Fixed Bank 3.88% 65% 7 years 30 year
Office Floating Bank L + 285 65% 3 years plus two 12-month ext. IO
Retail Floating Finance Company L + 375 65% 3 years plus two 12-month ext. IO, 4.25% floor
Retail - Mall Fixed CMBS 4.57% 60% 10 years 30 year, 5 Years IO
Retail - Mall Floating CMBS L + 410 60% 2 years plus three 12-month ext. IO
Industrial Fixed Offshore Bank 4.32% 65% 24 years 24 year
Multifamily Fixed Agency 3.89% 75% 10 years 30 year, 3 Years IO;
Office Fixed Life Company 3.75%
3 75% 50% 10 years IO
Office Fixed CMBS 4.46% 75% 10 years 30 year
Office Fixed CMBS 4.35% 70% 5 years 30 year
Mixed-Use Fixed CMBS 4.75% 75% 10 years 30 year
Mixed-Use Floating Finance Company 5.50% 70% 3 years plus two 12-month ext. 23 year
Office - Suburban Fixed Finance Company 6.00% 80% 10 years 30 year
Office - Suburban Fixed Bank 3.25% 55% 7 years 30 year, 5 Years IO
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
Retail - Development JV Equity REIT 25.0% 50%/50% 50% above 18%
Multi-Family Portfolio Preferred Equity REIT 10.5% 100.0% Up to 82% LTV
Multi-Family Development JV Equity Hedge Fund 35.0% 85%/15% 10% pref, 20% > 10%, 30% > 20%, 40% > 30%
Mixed-Use Preferred Equity REIT 11.0% 100%/% Up to 75% LTV
Multi-Family Development JV Equity Insurance Company 22.0% 100% 35% above 10%, 45% above 15%, 50% above 18%
SENIOR & SUBORDINATE LENDING SPREADS BASE RATES
Maximum Loan-to-Value DSCR Spreads September 6, 2012 Two Weeks Ago One Year Ago
Fixed Rate - 5 Years 65 - 70% 1.30 - 1.50 T + 215 - 415 30 Day LIBOR 0.24% 0.24% 0.23%
Fixed Rate - 10 Years 60 - 70%* 1.30 - 1.50 T + 200 - 365 U.S. Treasury
Floating Rate - 5 Years 5 Year 0.63% 0.71% 0.87%
Core Asset <65%* 1.30 - 1.50 L + 200 + 325 10 Year 1.62% 1.68% 2.00%
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 0.80% 0.17%
Mezzanine High Leverage 75 - 90% L + 900 + 1400 10 Year 1.72% 0.10%
* 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 + 290 T + 300 capital sources for 270 transactions in the past five years. For more
Strip Center 65 - 70% T + 310 T + 320 information on this report or on how we can assist your financing
Multi-Family (non-agency) 70 - 75% T + 240 T + 245 needs or hospitality or note sales, please contact any of our offices.
office
Multi-Family (agency) 75 - 80% T + 225 T + 230
Christopher T. Moyer
Distribution/Warehouse 65 - 70% T + 295 T + 305 Associate Director
R&D/Flex/Industrial 60 - 65% T + 310 T + 325 (212) 841-9220
Office 65 - 75% T + 290 T + 305 chris.moyer@cushwake.com
Full Service Hotel 55 - 65% T + 340 T + 365
* DSCR assumed to be greater than 1.35x
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