C&W EDSF Capital Markets Update - December 3, 2012

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• Borrowers interested in low-leveraged financing for office or apartment buildings are seeing more parity in bids from life companies, banks, conduits and rating agencies. Six months ago, a borrower might have received bids in a 100-basis point range from these lenders. Today, bids might come back in a 25-basis point range or less.

• Some regional banks that were only lending to existing borrowers are branching out to new relationships as they are finding it difficult with the competition in the market from life companies, debt funds, and CMBS to lend capital only to those existing relationships.

• Year-to-date US CMBS issuance has been $38 billion which is almost $10 billion ahead of last year according to Commercial Real Estate Direct. With another $3 billion anticipated to be issued in December, total issuance for 2012 should be approximately $41 billion compared to $30 billion in 2011. Preliminary estimates for 2013 CMBS issuance have been generally between $60 and $70 billion which could include as much as $10-15 billion of floating rate bonds.

• CMBS lenders have grown increasingly aggressive as the year has progressed. Although AAA spreads have widened modestly over the last couple of weeks with Fiscal Cliff issues, they are still near cyclical lows and fixed income investors remain yield hungry.

C&W EDSF Capital Markets Update - 12.3.12

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