MARKET UPDATE
January 4, 2012
January 4, 2012
WISHING
YOU A HAPPY &
PROSPEROUS NEW YEAR
Deals of the Month
$11,700,000
Life Company permanent on a 2-building multi-tenant office building of
111,884
SF in San Diego at 4.10% 10/25 CLOSED
$50,000,000 life company permanent for a
203-unit luxury apartment building over ground floor retail, at 4.15% 10/30
with 5 years interest only. CLOSED
$25,500,000 on an investment grade lease with 16 years remaining on a 170,000 SF office building. CMBS quote at 250+ 10-year Swaps for a 10/30, 74% loan-to-purchase. UNDER APPLICATION
$11,100,000 on a 46,500 SF Bristol Farms anchored neighborhood shopping center in Rolling Hills Estates with one of our correspondent life companies. CLOSED
$9,400,000 bridge loan on a 62% leased 71,000 SF strip retail center on the following terms: 6% for a 5-year term amortized over 30 years with one of our many bridge lenders. CLOSED
$6,350,000 Life Company Forward Commitment Escondido owner-user build to suit warehouse 4.35%, 15/15 (borrower’s request to match lease term), rate locked in June prior to construction of improvements for a forward funding in December upon completion of construction. COMMITTED
$25,500,000 on an investment grade lease with 16 years remaining on a 170,000 SF office building. CMBS quote at 250+ 10-year Swaps for a 10/30, 74% loan-to-purchase. UNDER APPLICATION
$11,100,000 on a 46,500 SF Bristol Farms anchored neighborhood shopping center in Rolling Hills Estates with one of our correspondent life companies. CLOSED
$9,400,000 bridge loan on a 62% leased 71,000 SF strip retail center on the following terms: 6% for a 5-year term amortized over 30 years with one of our many bridge lenders. CLOSED
$6,350,000 Life Company Forward Commitment Escondido owner-user build to suit warehouse 4.35%, 15/15 (borrower’s request to match lease term), rate locked in June prior to construction of improvements for a forward funding in December upon completion of construction. COMMITTED
$2,850,000 life company
permanent for a 35,000 SF signle tenant office building. IN CLOSING
10-Year
Treasury Forecast The average forecast of the 71 economists surveyed by Bloomberg
in November moved their median estimates for the 10-year Treasury
yield down to 1.67% for the 4th Q 2012, remaining at 2.20% for the
4thQ 2013 and down to 2.50% for the 2nd Q 2014. The lowest estimates were
1.40%, 100% and 1.64% respectively.
Rates have moved up 20 basis points since the
middle of December and the Fed continues to be the largest buyer of Treasuries
to try to keep rates down.
Question, as indicated by PIMCO below and Fed's concerns over how long they can continue to stimulate, is how long will the Fed continue to buy Treasuries at this rate and what is the price point needed to attract other buyers?
Remember that you'll need a 20% increase in your gross income to overcome a 1% increase in interest rates.
Question, as indicated by PIMCO below and Fed's concerns over how long they can continue to stimulate, is how long will the Fed continue to buy Treasuries at this rate and what is the price point needed to attract other buyers?
Remember that you'll need a 20% increase in your gross income to overcome a 1% increase in interest rates.
Expert's Opinions
Bill Gross of PIMCO Warns Investors of Looming Inflation:
http://finance.yahoo.com/news/pimcos-gross-warns-investors-looming-164905487.html
Bill Gross of PIMCO Warns Investors of Looming Inflation:
http://finance.yahoo.com/news/pimcos-gross-warns-investors-looming-164905487.html
PIMCO's Euro Outlook:
http://www.pimco.com/EN/Insights/Pages/PIMCO-Cyclical-Outlook-for-Europe-Policy-Developments-Will-Shape-Growth-Prospects-and-Risks-in-2013.aspx
Fed Beocming Worried About Stimulus Side Effects: http://finance.yahoo.com/news/fed-sticking-asset-buys-despite-growing-internal-doubts-190347647--business.html
If you are interested in access to just about every major financial publication’s editorials, check the following website and save it in your bookmarks: http://www.realclearmarkets.com
The Month In Review The 10-year Treasury opened at 1.92% this morning (January 4), up from 1.75% on December 7, on positive investor reaction to the 12th hour fiscal cliff deal. The month opened with oil at $86.05, the Euro at $1.29 vs. the Dollar and Gold at $1,701.55. The unemployment rate dipped to 7.7% in early December, while the economy created a disappointing 146,000 jobs, and the FED expects stubborn joblessness to continue for some time. November OC housing sales hit a 7-year high. US retail sales up a modest 0.3%, mostly on replacement of Hurricane Sandy losses. Factory output in the US increased 1.1% in November, which offset the 1% decline in October, blamed on Hurricane Sandy. Auto production jumped 4.5% last month, the first increase since July, and largely for replacement of autos lost due to the storm. Economists are forecasting modest economic growth of 2.1% in 2013, after 2.2% growth in 2012, and a 3.1% 3rd Q GDP. The Homebuilder' s Confidence Index rose to its highest level in more than 6.5 years. US government sold the remainder of its AIG stock and is going to sell half of its stake in GM, which will be purchased by car makers. OC exports grew 22% in 2010, 20.2% in 2011 and are expected to grow at a 6.5% per year over the next three years, according to a Cal State Fullerton report, after dropping 14.9% during the recession. The Conference Boards Leading Economic Indicators dropped 0.2% in November after a 0.3% increase in October. This was the first decline in the index since a 0.4% decline in August. Consumer spending rose 0.4% in October, while personal income rose 0.6%, the biggest gain in 11 months. Durable goods orders rose 0.7% in November, after rising 1.1% in October.
Lack of new home construction has driven OC inventory down 61% from a year ago, and the median home selling price up 16% to $464,000. The market time to gobble up the current 3,254 homes on the market is 1.35 months at the current pace vs. 4.64 months a year ago. OC homes listed for under $1 million take 1 month on average to sell, while over $1 million take 5.39 months. The million dollar plus market represents 32% of all homes listed and 8% of all homes that entered escrow in the past months. The dollar amounts vary, but this scenario is playing across the country due to diminished home inventories due to a lack of new home construction. The national home vacancy rate is 1.9%, the lowest since 2005. In addition, distressed listings have dropped 93% from the 2008 peak. Watch for home prices to jump substantially this year. Housing always leads the way out of recession and this one is no different. So, although commercial property vacancy rates are falling and rental rates are rising, commercial real estate is not expected to fully recover until 2014 or 2015.
Bank closures (140 in 2009, 157 in 2010, 92 in 2011 and 51 in 2012) have decreased as the banking industry has strengthened with earnings powered by the best banking profits since 2006, as more people and businesses are taking out and repaying loans as the economy recovers. For the first time since 2009, banks' earnings growth is being powered by higher earnings. Banks had previously managed to boost earnings by putting aside less money for possible losses.
What a surprise, the fiscal cliff was avoided at the last minute! Now, let's hope these folks can figure out how to cut spending. Don't hold your breath. The Treasury yield has jumped, as we have expected, on the fiscal cliff deal, which awaits Obama's signature.
The December jobs report came this morning with employers adding 156,000 jobs and the unemployment rate up a tick to 7.8%. This was within expectations, but still well below the 250,000+ needed to improve unemployment. In addition, the real unemployment rate, including those who have given up and those who are part-time and want full-time employment, stands above 14%.
January 4 saw oil at $92.86, the Euro at $1.3054 vs. the Dollar and Gold at $1,642.40.
- Can
handle loan sizes from $1,000,000 to $150,000,000+ nationwide.
- Retail, Industrial, Office, Multifamily, Medical office, Hospitality, Self- Storage and Health Care, including some great single-tenant sources.
- WESTCAP's stable of exclusive and semi-exclusive correspondent sources include:
- AEGON USA
- Allianz Investment Corp
- Aviva Investors
- Broadview Financial
- 40/86 Capital Advisors
- GENWORTH
- ING Investment Management
- MEMBERS Capital
- NATIONAL LIFE INSURANCE COMPANY
- OHIO NATIONAL FINANCIAL SERVICES
- PNC/ARCS
- StanCorp
- Sun Life Assurance of Canada
- UNUM Group
In addition to these
outstanding correspondent life companies, we also enjoy successful long-term
relationships with a full range of debt and equity programs, including Fannie
Mae, Freddie Mac and HUD, a long list of CMBS,
construction lenders, bridge lenders and
mezz sources.
We are always available to discuss potential financing and or equity requirements, or to provide a written quote to help convince a seller that you, or your client, are the most qualified buyer. We will also handle any size transaction, as we are interested in establishing long-term relationships as early as possible.
Steve BridgesExecutive Vice President
WESTCAP CORP
9960 Irvine Center Drive
Irvine, CA 92618
Office: (949) 756-2520 x 204 Cell: (949) 235-1540
sbridges@westcapcorp.com
www.westcapcorp.com
CA RE Broker: 00465840
WESTCAP CORP
9960 Irvine Center Drive
Irvine, CA 92618
Office: (949) 756-2520 x 204 Cell: (949) 235-1540
sbridges@westcapcorp.com
www.westcapcorp.com
CA RE Broker: 00465840
