Understanding Real Estate Understanding Real Estate
Understanding Real Estate Understanding Real Estate
Understanding Real Estate Understanding Real Estate
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2009 Global <strong>Real</strong> <strong>Estate</strong> Securities<br />
Market Developments<br />
Significant positive developments<br />
‣ Stimulus continues to expand globally; monetary stimulus is in 20th month<br />
• Financial programs are beginning to work; U.S. is narrowing in on effective solutions<br />
‣ PPIP/TALF targeting commercial real estate loans and CMBS (1) markets<br />
• CMBX spreads are 308 bps tighter (AAA) (1)<br />
• REIT unsecured bond spreads have improved 634 bps (2)<br />
‣ Equity recapitalization process has begun<br />
• U.S. secondary offerings have positively surprised the market—$12 billion raised in common equity<br />
and unsecured bonds<br />
• Significant recapitalizations in U.K. ($4 billion), Australia ($6 billion) and Singapore ($3 billion)<br />
• Asset sales and debt refinancings have been better than expected<br />
‣ China stabilizing<br />
Negative developments<br />
‣ Global economy deteriorated—cash flow growth expectations downgraded for 2009–2010<br />
‣ Equity recapitalizations are dilutive (Continental Europe and Japan still need to recapitalize)<br />
Market discounted the economic downshift,<br />
but has been positively surprised by REIT access to capital<br />
Source: Cohen & Steers<br />
(1) CMBX derivatives are a group of indexes made up of 25 tranches of commercial mortgage-backed securities (CMBS), each with different credit ratings. Spreads measured from the widest on<br />
3/9/09 to 5/15/09.<br />
(2) Spreads measured from 12/31/08 to 5/13/09.<br />
CPRET8309_OS
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