Land Lines – Week 39

Utah Land

Land Lines – Week 39


A 2,800-mile horseback ride across the country began Friday in California and is slated to end in 20 days in Washington, D.C. The Grass March Cowboy Express, which will hit Utah on Wednesday, was organized in protest of the Bureau of Land Management. We will keep you updated on this as it is important to many here in Utah.

We have added graphs have to show market numbers over the last 8 weeks, they are under each category.

Many of you have received the 2Q Newsletter in the mail, if you haven’t here is the link: Q3 will be mailed out later this fall, if you would like to receive a print version click here.

If you or someone you know has been on the fence about selling their land, fall is a great time to start the process, marketing and selling a raw or papered land deal correctly takes time and experience. If you would like to schedule a meeting to discuss selling your property now or in the future please call. I look forward to speaking with you.

If you would like to receive the weekly land stats and headliners click here to subscribe. Past editions are available on the website under the Land Lines topic. Feel free to share with friends and associates.



Brooke GlaittliLand Sales – 801-554-2332 –


Week 39 Land Stats


9/13/2014-9/20/2014: Salt Lake, Utah Counties and Davis Counties*

12 land parcels sold, 6 sold in week 37.

82 properties were put on the market, as compared to 42 in week 38.

Utah Land


YTD along the Wasatch Front**

4,823 single family building permits have been issued, there were 4,620 issued as of week 38.

45 duplex/ twin home permits have been issued, 42 had been issued by week 38.

103 apartment/ condo permits have been issued, 102 had been issued by week 38.

178 commercial permits have been issued (this number does not reflect all types of permits), 171 had been issued by week 38.

*Source WFRMLS               **Source Construction Monitor

Utah LandUtah Land


Recent Headliners:



Housing News


After four consecutive months of increases, sales of previously-owned homes slowed in August as cash investors backed out of the market, easing the path to home ownership just a bit for regular folks.

Sales of existing homes fell 1.8% from July to a seasonally adjusted annual rate of 5.05 million in August, according to National Association of Realtors data released Monday. Sales were down 5.3% from a year earlier, when the pace stood at 5.33 million. Still, August sales stood at the second-highest pace of 2014. (July’s sales numbers, still the highest of the year, were revised slightly downward to an annualized pace of 5.14 million.)

The National Association of Realtors tracks completed transactions of single-family homes, townhomes, condominiums and co-ops each month, dubbing this group “existing home sales.” As the housing market crashed back in 2008, NAR also began tracking the share of home sales that were distressed (foreclosures and short sales). August marked the lowest level of distressed sales (as a share of total existing sales) that nation has seen since the recession.

Read more here.


Monday’s Market Numbers


That anguished cry you heard from the capital markets during the week was the result of the California Public Employees’ Retirement System (CalPERS) announcing that it would no longer invest in hedge funds, saying they were too time-consuming and too complex, and had produced unsatisfactory rates of return over the past one-, three-, and five-year periods. Since CalPERS is clearly the 800-pound gorilla in the room—it’s the largest pension fund in the United States—its announcement will have serious repercussions in the pension fund advisory, management, and investment businesses, as it will for the pension funds themselves as they look at a new pile of money they have to invest.

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Also making a racket were the hedge funds themselves, as they tried to assess the impact of the CalPERS announcement on their business model. If the CalPERS announcement really excites the herd, watch out—a “flow of funds” may be in the offing.

Smarter people than us will analyze and reanalyze the CalPERS decision, and it will be debated and discussed at conferences and symposiums through year-end and beyond.

Could real estate be next? It’s unlikely—real estate returns over the one-, three-, and five-year periods have been excellent.

Of greater importance is the question of whether a “tipping point” can be reached—i.e., a point where investors’ patience will be more than “sorely tested” and they will strike with the only tool available to them: their feet, so to speak. Could this lead to a period of activist pension funds banding together to terrorize the investment managers of one or more “investment strategies” or theses?

If Size Matters

It is estimated that the top 100 banking companies hold almost $1 trillion of commercial real estate mortgages, allocated as follows:

In $ (billions) Percentage
Commercial mortgages 650.4 68.7
Multifamily mortgages 182.6 19.3
Construction and land loans 113.9 12.0
Total $946.8 100.0%

If we change the metric to overall holders of commercial real estate debt, the breakdown is as follows (as of December 31, 2013) in billions of dollars:

Commercial Multifamily Percentage
Banks $1,208.8 $285.75.51 48.9
CMBS 491.9 75.5 17.7
Insurers 290.3 53.1 10.7
Federal agencies 0.0 243.5 7.8
Agency CMBS 0.0 147.1 4.8
Other 219.3 113.0 10.4
Total $2,282.3 $917.3 100.0


Monday’s Numbers: September 29, 2014

The Trepp survey for the week ending September 19, 2014, showed average spreads coming in as many as 10 basis points, with the average breaking the 130-basis-point barrier. The implied rate for ten-year, modestly leveraged commercial real estate mortgages equaled 3.89 percent—75 basis points lower than at year-end 2013. If you are waiting for someone to ring a bell and say that we have reached the bottom, consider the bell rung. Think twice about ignoring these record-low levels. A quote from Herbert Stein, President Richard Nixon’s economic adviser, seems appropriate and timely: In responding to a reporter’s question at a news conference, Stein was heard to say, “An unsustainable trend will not last forever.”

Asking Spreads over U.S. Ten-Year Treasury Bonds in Basis Points (Ten-year commercial and multifamily mortgage loans for properties with 50 percent to 59 percent loan-to-value ratios)
12/31/10 12/31/11 12/31/12 12/31/13 This week (9/19/14) Last week (9/12/14) Month earlier
 Office 214 210 210 162 134 141 143
 Retail 207 207 192 160 128 138 137
 Multifamily 188 202 182 157 127 137 135
 Industrial 201 205 191 159 127 137 135
 Averagespread 203 205 194 160 129 138 138
 10-yearTreasury 3.29% 2.88% 1.64% 3.04% 2.59% 2.62% 2.49%

The Cushman & Wakefield Equity, Debt, and Structured Finance Group’s monthly Capital Markets Update of commercial real estate mortgage spreads dated September 11, 2014, showed spreads increasing 10 to 15 basis points across the board compared with the prior survey (dated July 4) as lenders seem to be trying to make up some ground after the “great low spreads due to low Treasury yields giveaway” of the past few months. Even with the uptick in rates, it remains an attractive time to finance or refinance commercial real estate.

Ten-Year Fixed-Rate Commercial Real Estate Mortgages(as of September 11, 2014)
Property Maximumloan-to-value Class A Class B/C
 Multifamily (agency) 75–80% T +160 T +170
 Multifamily (nonagency) 70–75% T +160 T +165
 Anchored retail 70–75% T +190 T +200
 Strip center 65–70% T +190 T +200
 Distribution/warehouse 65–70% T +175 T +200
 R&D/flex/industrial 65–70% T +195 T +205
 Office 65–75% T +185 T +190
 Full-service hotel 55–65% T +250 T +270
 Debt-service-coverage ratio assumed to be greater than 1.35 to 1.


Year-to-Date Public Equity Capital Markets

Dow Jones Industrial Average: +3.24 percent

Standard & Poor’s 500 Stock Index: +7.28 percent

NASD Composite Index (NASDAQ): +8.04 percent

Russell 2000: –3.81 percent

Morgan Stanley U.S. REIT Index: +8.74 percent

Year-to-Date Global CMBS Issuance(in $ billions as of 9/29/14)
2014 2013
U.S. $68.6 $60.5
Non-U.S. 1.9 8.5
Total $70.6 $69.0
Source: Commercial Mortgage Alert.


Year-to-Date U.S. Treasury Yields

U.S. Treasury Yields
12/31/12 12/31/13 9/27/14
 3-month 0.08% 0.07% 0.00%
 6-month 0.12% 0.10% 0.02%
 2-year 0.27% 0.38% 0.56%
 5-year 0.76% 1.75% 1.75%
 7-year 1.25% 2.45% 2.13%
 10-year 1.86% 3.04% 2.50%