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| Weekly Interest Rate Tracking |
| February 11, 2009 |
Good Morning,
Attached is a PDF copy of Colliers Meredith & Grew's interest rate sheet that includes current and historical Treasury, LIBOR and Prime interest rates, which are updated daily with real time data from Strategic Alliance Mortgage.
We provide these updates on a weekly basis to keep our clients and colleagues aware of rate movements. We hope you find this information helpful.
DOWNLOAD INTEREST RATE SHEET (207KB)
The following Market Perspective provides insights and commentary on breaking news and emerging trends in commercial real estate finance.
The View From 40,000 Feet: Capital Markets
Remarks by Kevin Phelan, President of Colliers Meredith & Grew, at Colliers Meredith & Grew's 30th Annual Trends in the Real Estate Market Seminar
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While I would like to convince you that forty years of experience in this business has given me uncommon insight into the present state of the capital markets, I can do no such thing. The problems we now face in the industry and the macro-economy are multi-faceted and inter-dependent. There are no easy explanations, except to say that this industry is cyclical, and sometimes violently so.
The values of our real estate investments are heavily dependent on the price and availability of credit. We are all keenly aware of the issues in the credit markets. Risk premiums in the markets for commercial real estate debt and corporate debt have risen to unprecedented levels. This rise suggests that market participants view even the “safest” of investments as extremely risky.
At the heart of investor concern is one question: What is any asset worth today? Value, like beauty, is in the eye of the beholder – and valuations in every asset class are entirely uncertain, because the risks of potential losses down the road are largely unknown.
Many of the mortgage losses and defaults to date have occurred in the residential market, but issues in the commercial market will inevitably surface. As Sam Zell noted in an article in 1986 - “when an underwriter is processing a loan he knows he will sell immediately, his care and concern is directly related to the length of time he owns the loan.” His concerns about securitization were well founded. Over one trillion dollars worth of securitized loans done in 2005 and 2006 will mature between 2012 and 2016. And that’s less than 40% of the commercial mortgages done in those years. Despite that uncertainty, local market fundamentals in Boston remain strong. Our own Federal Reserve Bank here in District One believes that because of our underlying medical and educational base, our economy is in a better position to withstand these conditions than the rest of the country.
The road to recovery is an uncertain one. Recent conversations I’ve had suggest that a substantive stimulus package should make credit more available. This would not only help asset values, but it would also have great impact on our local markets in the form of infrastructure spending and the resulting job creation. Consumer confidence (and the 70% of GDP which is consumer spending) will eventually return, but not until consumption and productivity come back in line. Americans have become addicted to cheap credit, and our national savings rate dwindled to NEGATIVE 3% over the last decade - that addiction must be broken if sustainable economic growth is to resume.
Local and National commercial banks will remain in business, but we do not yet know the new form that government regulation will take. We only have to witness what’s going on in Europe right now with the nationalization of the Irish and Scottish banks – everyone has concerns about nationalization in the banking system. But from my vantage point, the biggest issue is on the structural side and what it’s going to take to foster a reliable and vibrant banking system in the United States.
In terms of our core values at Colliers Meredith & Grew, this year will be no different than the last 137 years. We will bring integrity and honesty to our dealings, and advise our clients about responding appropriately to constantly changing market realities. |
Spotlight / 2009 Forecast / Finance: A return to basics
By Jeff Black, Loan Analyst at Colliers Meredith & Grew
New England Real Estate Journal — January 30–February 5, 2009
The credit crisis has prompted a return to basics and this will be a plain-vanilla year. Underwriters will look at least twelve months forward for rollover risk and will use higher market vacancies and market-rate management fees (regardless of self-management) in their analysis. Banks are also beginning to ratchet down maximum loan amounts in order to originate more, smaller deals and spread the risk.
| Capital Sources & Quotes |
| Capital Source |
DUS/FHA |
| Property Type |
Multifamily - Garden |
Property Size |
160 Units |
Quote for Securitized Deal |
No |
Quoted Deal Amount |
$5,200,000 |
Deal Type |
Permanent - Fixed to Floating Rate |
Structure |
9 years fixed + 1 year floating |
Index Base |
9-Year Treasury |
| Spread |
375 bps (Spread included 24 bps for 1.5 point premium) |
| Quoted Rate |
6.25% |
| LTV |
55% |
| DSCR |
1.50x |
| Term/Amortization |
10/30 |
| Deal Won On |
Proceeds |
| Originitation Date |
Week of January 26th, 2009 |
Disclaimer |
Sourced from Strategic Alliance Mortgage |
Insurers' Stocks Get Hammered
WSJ.com — February 11, 2009
Worse-than-expected earnings, deteriorating credit ratings and concerns about the adequacy of life insurers' capital bases hammered share prices on Tuesday amid a lower market overall.
Obama’s rescue plan explained
FT.com — February 10, 2009
The US Treasury has unveiled a revamp of its financial rescue plan, pledging to clean up to $1,000bn dollars of distressed assets from banks’ balance sheets and inject fresh capital into troubled institutions.
Adam Smith gets the last laugh
FT.com — February 10, 2009
The free market is dead. It was killed by the Bolshevik Revolution, fascist dirigisme, Keynesianism, the Great Depression, the second world war economic controls, the Labour party victory of 1945, Keynesianism again, the Arab oil embargo, Anthony Giddens’s “third way” and the current financial crisis. The free market has died at least 10 times in the past century. And whenever the market expires people want to know what Adam Smith would say. It is a moment of, “Hello, God, how’s my atheism going?”
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| Please contact the Capital Markets Group at Colliers Meredith & Grew with any financing questions.
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Colliers Meredith & Grew is a Boston-based commercial real estate company with integrated service groups including Brokerage, Capital Markets, Counseling & Valuation, Development & Advisory, Investment Sales, and Property & Asset Management. In addition to representing its core clients in New England, Colliers Meredith & Grew provides national and international real estate services to its multi-market clients as a member of Colliers International and as an owner/member of Strategic Alliance Mortgage LLC (SAM). Colliers International is a worldwide affiliation of independently owned and operated companies in more than 293 offices in 61 countries. |
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