Another fine example of quality workmanship......

Thank you to Brad Cox of Thomas D. Wood for his exemplary work in the area of "Pursuit of Greatness". His weekly commentary, found here, is made available weekly to hundreds of property owners around the country. I am glad to have his as my friend and colleague, with such a rich understanding and dedication to his craft.

Thanks Brad.

WEEKLY MARKET COMMENTARY - AS OF MAY 17, 2010

FOR CRE DEBT, IT'S BOTTOM'S UP - With billions of dollars in commercial real estate debt coming due, the industry refuses to panic, sensing that the cycle's bottom is near, said DLA Piper's 2010 State of the Market Survey.

Responding to this bottoming out process, the U.S. commercial real estate industry outlook remains largely bearish; however, DLA Piper said bullish sentiment is improving and has started to gain momentum.

The survey, measuring attitudes and perspectives of 308 top executives within the U.S. commercial real estate market, reveals that 60 percent described themselves as bearish, down from a record 90 percent in September 2008 when DLA Piper previously surveyed the market just days after the collapse of Lehman Brothers and the sale of Merrill Lynch to Bank of America.

Bullish responses, consequently, quadrupled from 10 percent to 40 percent.

Meanwhile, 60 percent said real estate markets will reach bottom in 2010. Looking ahead, respondents expect that workouts and loan extensions will be the two most prominent strategies used to navigate this recovery as waves of commercial real estate debt come due between now and 2014, DLA Piper said.
"After the most grueling downturn the industry has ever seen, there is a genuine sense of stability beginning to return to the marketplace," said Jay Epstien, chair of DLA Piper’s U.S. Real Estate practice.

"From this point, the recovery will hinge in large part on workouts and loan extensions, but the real wild card is job growth that would drive renewed real estate demand in virtually every asset class."

Other survey findings:

Two of three respondents believed that the federal government’s Troubled Asset Relief Program and Troubled Asset-Backed Securities Loan Facility and other real estate-focused programs have done "enough" to stabilize the real estate marketplace.

Consistent with this view 70 percent do not expect any additional federal legislation focused on aiding the U.S. commercial real estate market.

Six out of 10 respondents do not expect the commercial mortgage-backed securities market to return in time to help refinance the more than $150 billion in CMBS loans coming due in the next two years.

Respondents do not expect workouts to yield deep discounts with lenders: 61 percent of respondents expect that the largest loan write-offs will range between 11 percent to 30 percent.

Armed with war chests of new capital, respondents expect private equity and hedge funds, 37 percent, and REITS, 29 percent, to be the most active investors during the next near.

Multifamily, 37 percent, ranks as the most attractive investment opportunity during the next 12 months, while hotels, 25 percent, rebounded from last place in 2008 to finish as the second most attractive investment opportunity.


Market Snapshot—Monday’s closes (5-10-10) are in parentheses

Treasury Yields Key Indicators Other Key Indicators
2-yr 0.78% (0.82%) DJIA: 10620 (10380) Prime Rate: 3.25%
5-yr 2.15% (2.16%) NASDAQ: 2347 (2266) Fed Reserve Target Rate: 0.25%
10-yr 3.46% (3.42%) S&P 500: 1135 (1111) U.S. Unemployment Rate: 9.90%
30-yr 4.34% (4.27%) S&P 100: 516 (507)

LIBOR NYSE Comp: 7078 (6916)
1- Mo. LIBOR: .34% (.30%) Crude Oil: $72 ($75)
3-Mo. LIBOR: .44 (.37%) Gold: $1232 ($1208)

OUR SERVICES - As a privately held mortgage banking firm Thomas D Wood and Company has been arranging and structuring commercial real estate loans for over 35 years. We arrange all types of debt for existing commercial real estate properties through our correspondent relationship with life insurance companies, community banks and private lenders. Single-tenant, owner-occupied, and multi tenant properties are all acceptable. For a list of recent closings visit our web site at www.tdwood.com.

Until next week -

Brad Cox, CCIM, CPM
Senior Vice President - Debt Placement
Thomas D Wood and Company

Email: bcox@tdwood.com