4 posts tagged “cbre capital markets enews”
Today Bloomberg reports, The Federal Reserve, European Central Bank and four other central banks lowered interest rates in an unprecedented coordinated effort to ease the economic effects of the credit crunch. The Fed, ECB, Bank of England, Bank of Canada and Sweden's Riksbank each cut their benchmark rates by half a percentage point. The Bank of Japan, which didn't participate in the move, said it supported the action. Switzerland also took part. Separately, China's central bank lowered its key one-year lending rate by 0.27 percentage point.
The Commercial Mortgage Alert reports, “We estimate total commercial mortgage debt maturities for banks’ portfolios, insurance portfolios and CMBS to be $280 billion in 2009 and $320 billion in 2010. To date, CMBS credit performance (delinquencies) has outperformed bank portfolio loans.”
According to the MBA Databook, despite the malaise in new mortgage production, the data on the $3.4 trillion in outstanding commercial/multifamily mortgages show continued growth and relative strength. Despite the significant drop in mortgage originations, investors increased their holdings of commercial/multifamily mortgages during the quarter – as the relatively low level of originations exceeded an even lower level of portfolio run-offs. Between the first and second quarters, investors added $51 billion of commercial/multifamily mortgages (net) to their portfolios, a 1.5 percent increase.
Today Bloomberg stated, “Britain's banks will get an unprecedented 50 billion-pound ($87 billion) government lifeline and emergency loans from the central bank after the freeze in credit markets threatened to bring down the financial system. The government will offer to buy preference shares to help boost capital at Royal Bank of Scotland Group Plc, Barclays Plc and at least six other banks, the Treasury said in a statement today. The plan also guarantees about 250 billion pounds of loans and increases the amount the Bank of England makes available for banks to borrow to at least 200 billion pounds.”
CBRE reported the following today:
Today Bloomberg reports, Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson warned lawmakers that failure to pass a rescue plan to take over troubled assets from financial firms would threaten markets and the U.S. economy. “Action by the Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and for our economy,” Bernanke said in testimony prepared for delivery today to the Senate Banking Committee, “Global financial markets remain under extraordinary stress.” Bernanke and Paulson are pushing Congress to quickly approve a $700 billion plan to remove illiquid assets from the banking system.
Community and regional banks with a sizable amount of construction and land loans on their books are pushing for lawmakers to include them in the $700 billion bailout plan proposed by the federal government. Zelman & Associates says construction and land loans account for 9 percent of all loans at U.S. banks and thrifts, amounting to about $700 billion. Meanwhile, Foresight Analytics LLC reports a jump in construction loan delinquencies to 8.1 percent in the second quarter from 7.2 percent in the first quarter and 2.4 percent a year ago.
Commercial Real Estate Direct reported that spreads for cash CMBS ended last week wide by roughly 50 basis points, after a rollercoaster ride that saw them balloon as much as 100 bps during the week. Today they tightened by as much as 100 bps. Super-senior AAA bonds were quoted last Friday at an average of 325 bps over swaps, up from 277.5 bps over swaps a week earlier. That change, while dramatic in and of itself, belies the massive spread movements during the week.
From the CBRE Capital Markets eNews:
• Though small financial institutions with large holdings of Fannie Mae and Freddie Mac preferred stock could be hurt by a decline in share value, Federal Deposit Insurance Corp. Chairman Sheila Bair does not expect much of an impact through the banking system overall. There are no restrictions on the amount of preferred and common shares issued by Fannie Mae and Freddie Mac that can be held by banks, and the Office of Thrift Supervision reports that only 2 percent of thrifts hold Fannie Mae and Freddie Mac shares in amounts above 10 percent of their Tier 1 capital according to the MBA.
• Commercial Real Estate Direct reports, “While consumer spending is set to slow, business fixed investment looks like it will be a little more resilient during the second half of the year. Advance orders for durable goods rose 1.3 percent in July, following a similar-sized gain the previous month. Orders for non-defense capital goods, ex aircraft, which is the key component that tends to track business fixed investment, rose 2.6 percent and is up at a 13.5 percent annual rate over the past three months.”
• Crude oil and gasoline fell since Hurricane Gustav did not cause damage to platforms in the Gulf of Mexico. Oil fell 7.1 percent this week as the euro dropped to a seven-month low against the dollar. The dollar's recovery will cause the decline in oil prices to continue, OPEC President Chakib Khelil said today, adding that he expects supply to outstrip demand by as much as 1 million barrels a day in the first half of 2009.
• Nearly 40 percent of European buyers chose Florida in this year's Profile of International Home Buyers survey from the National Association of Realtors as their preference for townhouse/multifamily property locations. Meanwhile, 5 percent of European investors chose New York. The U.K., Germany and the rest of Europe account for more than $3.2 billion of foreign investment into U.S. commercial properties while the Middle East holds $2.96 billion year-to-date.
Posted by: Rich
From CBRE Capital Markets eNews: In a new report, Fitch Ratings said a 15 percent drop in property values would do relatively little to adversely impact the credit ratings of older vintage U.S. CMBS, including tranches deemed impaired. The report tested fixed-rate loans maturing through 2012, and Fitch concluded that the older CMBS vintages were “well-insulated” from a 15 percent drop in property value.
Investors.com reported that rising consumer prices, better-thanexpected economic data, and inflation warnings by Federal Reserve Chairman Ben Bernanke have raised expectations that the central bank will hike interest rates this year. Futures traders have priced in a quarter-point rise to 2.25% by October. That follows several hawkish speeches by Bernanke, including a June 12 vow to "strongly resist" mounting inflation pressures. But many economists say that inflation remains tame despite soaring energy and food prices. They say it would be premature to raise rates while the economy remains weak and credit is still tight.
According to the MBA, commercial real estate investors—inside and outside the United States—could find pockets of opportunities in commercial real estate despite the continuation of re-pricing risk. Foreign banks and other lending institutions have increased their interest in the U.S. market. This is also opening opportunities for U.S. real estate investors that are finding debt too difficult to obtain at home. This is particularly relevant for large transactions of more than $50 million, which have become difficult to place amid the debt correction as that segment of the market was dominated by CMBS.
Oil remains the wild-card in the deck that could determine the length and breadth of the current economic slump. Record oil prices are now in full effect as prices at the pump are above $4 per gallon in most areas. Although oil prices retreated earlier this week, talk of a $150 target for a barrel of West Texas Intermediate has touched off a speculative rally pushing the price to $138, reported Commercial Real Estate Direct.
Posted by: Richard
