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| Capital Markets Briefing |
| August 10, 2009 |
Good Afternoon,
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 (22KB)
Capital Markets Briefing
The summer doldrums—which unofficially end post-Labor Day—will invariably impact transaction velocity over the next two weeks, which is to be expected this time of year. In an effort to prepare our clients/colleagues for the inevitable post-Labor Day uptick in activity, we've highlighted some of the emerging trends in the real estate capital markets that will have an impact on the availability of credit going forward.
- The Federal Open Market Committee (FOMC) will conclude its policy meeting on Wednesday. Treasury yields rose to their highest levels in two months following last week's unemployment report and the Fed's auction of $75 billion in debt sales this week will test the market, potentially leading to even higher Treasury rates. We will provide an update on this important development on Wednesday afternoon.
- At the mid-year point, life insurance companies and local/regional banks have emerged as the lenders of choice. While their buckets of money are neither big nor deep, these institutions are still funding deals - albeit selectively and at very conservative levels.
- Across the capital sources spectrum—and particularly prominent among portfolio lenders—originators are underwriting the credit portions of multi-tenant properties to breakeven debt coverage; meaning the credit tenant(s) must underwrite to a minimum 1.0x debt service coverage ratio. In many cases, originators are also requiring loan amortizations to be within the remaining term of the credit tenant lease(s).
- Available capital for new originations will remain constrained as portfolio lenders limit their new loan proceeds to existing clients and/or rollovers within their existing servicing portfolios. This is typical for life insurance companies as their allocations are historically exhausted by the start of the fourth quarter. Given the severe pullback in real estate allocations this year, the depletion of capital allocated for new originations will be more pronounced as alternative sources of capital have yet to fill the void historically filled by conduits at this time of the year.
- As their capital positions have improved, many of the nation's major life companies have seen their capital positions improve enough that they are no longer entertaining discounted/reduced prepayments.
Debt/Capital Markets Articles of Note
Testing week for US bond investors
Financial Times — August 10, 2009
US bond investors are braced for a testing week, dominated by record $75bn in debt sales by the US Treasury and the Federal Reserve’s policy meeting, which concludes on Wednesday. Treasury yields have been rising and are back at levels last seen in early June, with the yield on 10-year notes trading at 3.84 per cent on Monday.
Treasuries Gain as ‘Attractive’ Yields Lure Traders; Sales Loom
Bloomberg — August 10, 2009
Treasury 10-year notes rose for the first time in six days as yields at their highest levels in two months lured buyers before the U.S. sells a record $75 billion of notes and bonds this week.
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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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