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The Real Estate Capital Scoreboard - December, 2006


Chicago, Illinois, December 1, 2006 – Benchmark treasuries (five and ten-year) increased by nearly 25 basis points during November; settling at about the same levels as a month ago. The 10-year Treasury converged with the 5-year — the continuation of a flat-yield curve. Prime remains unchanged since August, while LIBOR slightly increased by the end of the month.

New construction opportunities still attractive as institutional-quality properties are priced near replacement costs. Complicated entitlements and limited infill-sites keep land costs at premiums. Industrial, apartment, health care and lodging properties offer the most development options. Retail development focused on lifestyle and niche projects.

Hot topics for the month?

(1) Concerns about slowing economy— perceived as mild.
(2) Improving office market fundamentals and limited new supply coming on line.
(3) Return-on-cost in major markets pushing developers to secondary and tertiary properties and locations.
(4) Construction costs more attractive as raw materials and labor availability approach more normal levels.


The Real Estate Capital Institute’s research director, Nat Zvislo notes, "Everyone is flush with cash. Conduits control market share. Banks provide aggressive construction proceeds. Life companies offer fixed-rate debt with balance-sheet flexibility.” Adding, “Borrowers are the winners in capital market battles.”


The Real Estate Capital Institute monitors realty rates data for debt and equity yields on a daily, monthly and annual basis. The Institute tracks benchmark rates including treasuries, bank prime and LIBOR dating back to 1990. Additionally, interest rates are updated hourly by calling the Real Estate Capital RateLine at 7RE-CAPITAL (773-227-4825).


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