Market Rate Watch

10 year treasury 10-15-08: 3.99%; 1 month ago 3.54%, 6 months ago, 3.67%; 1 year ago 4.57%

5 year treasury 10-15-08: 2.86%; 1 month ago 2.69%, 6 months ago, 2.79%; 1 year ago 4.23%

Wall Street: Wells Fargo remains the only lender looking at 75% loans. They will look at them on a 2, 3 or 5 year fixed rate basis. Today the rates range from 6.15% for the 2 year deal and 6.7% for the 5 year deal. The debt coverage requirement is 1.30 times and 30 year amortization is relatively standard. Wells has now financed over $1.2 Billion in their portfolio program. They are servicing all their own loans and the portfolio has minimal to zero delinquency. They are still not interested in hotels. The other Wall Street lenders like NATIXIS and CIBC are focusing on larger (in excess of $15MM) short term floating rate deals. For 65% loans the spread over LIBOR is about 375 (7.89% today), For 75% the spread is 4.25% (8.39% today).

Life company spreads continue to edge up and many are sitting on the sideline. More life companies have written off 2008 and are looking towards 2009 to start lending again. Spreads for the life companies have edged up to the 300 basis point spread range for loan terms anywhere from 4 years to 15 years. Longer terms are still available on a fully amortizing basis. Loan to values are still at a maximum of 65%. In addition deals generally need to be very vanilla and easy to understand. 10 year rates are close to 7% today.

Credit Tenant Lease Transactions have finally been impacted by the financial crisis. Interest rate spreads for Walgreen’s which were 270 in mid September have risen to over 370. In addition, GSA deals (US Givernment) which had been priced in the 215 range have risen to 325. This have effectively put the credit tenant lease lenders out of the market for now until the rescue plan works it way through the system. GE Capital is now officially on the sideline through the end of the year.

Agency Lenders: Freddie Mac is sitting on the sidelines at this point after the government rescue. Fannie Mae is still in business and quoting, approving and funding deals. Interest rate spreads are in the 270 to 280 range making the 10 year rates about 6.6%. Florida has been but on the Fannie Mae pre-screen list. So any DUS lender must get a pre-approval before sending out a loan application. That means tighter scrutiny and more conservative underwriting for Florida Multi-family deals.