Market Commentary
RealtyRates.com™ Investor Survey Cap Rate Index Records Modest Increase During 1st Quarter 2008
Contrary to a 41 basis point drop in Treasury rates to which most commercial mortgage interest rates are indexed, but buoyed by generally higher spreads-over-base and a two basis point jump in surveyed equity dividend rates, the RealtyRates.comTM Investor Survey Weighted Composite (Cap Rate) IndexTM increased a modest seven basis points, from 9.49% to 9.56% during the 1st Quarter of 2008.
That said however, five of the 11 property sectors surveyed, including core Industrial, Office and Retail sectors recorded Method-Weighted Property Category (Cap Rate) Index decreases.
The greatest increase was recorded by the Lodging sector, up 73 basis points, followed by the Golf sector, up 17 basis points. The greatest decrease was recorded by the Restaurant sector, down 19 basis points, followed by the Office sector, down 11 basis points from the previous quarter.
The increase in the Weighted Composite (Cap Rate) Index™ is consistent with coincident decreases in surveyed cap rates, i.e., those derived from actual market transactions which are historical in nature, as well as rates derived via built-up techniques, which tend to be forward looking
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