Europe, Uncertain U.S. Economic Recovery Keep CRE Loan Values High
Carl Gaines July 5, 2012, 8:30 a.m.
Commercial real estate loans that collateralize CMBS continue to rise, according to May 2012 data from DebtX. As The Mortgage Observer has previously reported, the loan sale advisor has charted a steady increase in the aggregate value of these loans as the market continues to improve in fits and starts.
For May, DebtX priced 55,510 loans with an aggregate balance of $765.7 billion. These increased to 88.2 percent as of May 31, 2012 compared to 88.1 percent the month previous. Year over year the value increased from 81.6 percent.
“Commercial real estate loan prices climbed for a fifth straight month in May as underlying market conditions continued to improve,” DebtX CEO Kingsley Greenland said in a prepared statement about the findings. “CRE loan prices in May benefited from a decline in Treasury yields.”
That decline in Treasury yields has continued since DebtX collected the May 2012 data. Yields on 10-year notes fell to 1.61 percent Monday, while yields on 30-year bonds fell to 2.69 percent, according to data from the U.S. Department of the Treasury.
The International Monetary Fund on Tuesday predicted a “tepid” U.S. economic recovery and said that the U.S. “remains vulnerable to contagion from an intensification of the euro area debt crisis,” both factors that are likely to keep commercial real estate loan prices low and continue the trend the DebtX data has charted.