New Trepp Research Forecasts CRE Spreads and Yields by US Region

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Trepp has published a regional research piece that projects the average spread and debt yield for CRE loans that will price over the next six months.

Month-Over-Month Change in Average Debt Yield - US Census Divisions

"Trepp’s trend analysis shows that spreads for new loans in the South Atlantic and Pacific regions are projected to tighten in May, while those for the East South Central should widen."

Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released its latest research report, Trepp Forecast of CRE Spreads and Yields: Regional Leaders and Laggards, which uses historical data to forecast future loan pricing performance. The full report can be accessed here: https://info.trepp.com/trepp-forecast-of-cre-spreads-and-yields-pr.

To help predict the effect of potential future market volatility on the CRE industry, Trepp has published a research piece that projects the average loan spreads and debt yields for CRE loans that will be issued over the next six months. This research uses historical loan spread and debt yield data to determine which factors might have a greater effect on the pricing of new loans, as well as the overall health of the CRE and CMBS markets.

“New loan pricing is driven by many macro and micro factors,” said Joe McBride, Director of Applied Data & Research at Trepp. “Based on our initial study and forecast, loan spreads are highly influenced by macro movements while debt yields are somewhat more driven by regional and property-specific factors. Trepp’s trend analysis shows that spreads for new loans in the South Atlantic and Pacific regions are projected to tighten in May, while those for the East South Central should widen. Over the next six months, the trend of tightening is expected to continue generally across the nation.”

Trepp’s research breaks out the average spread and debt yield projections by US Census Bureau Divisions. The results forecast that loans backed by properties in the West North Central, South Atlantic, and Pacific US will price with tighter spreads in the month of May, while loans for East South Central, East North Central, and Mountain properties will price wider. At the end of Trepp’s six-month forecast (concluding at the end of October 2019), the Middle Atlantic and Pacific divisions will boast the tightest average spreads among US division.

In Trepp’s forecast of debt yield performance, loans backed by properties in the West North Central and Pacific divisions are expected to price with higher average debt yield during the month of May, reflecting a potential increase in the returns that lenders could receive. Average debt yields for West South Central and South Atlantic loans are projected to drop in May.

To see the complete six-month forecasts for average loan spread and debt yield by region, download Trepp’s research report: https://info.trepp.com/trepp-forecast-of-cre-spreads-and-yields-pr. For daily CMBS commentary, follow @TreppWire on Twitter.

About Trepp
Trepp, LLC, founded in 1979, is the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency, and investment performance. From its offices in New York, San Francisco, and London, Trepp serves its clients with products and services to support trading, research, risk management, surveillance, and portfolio management. Trepp is wholly-owned by Daily Mail and General Trust (DMGT). For more information, visit http://www.Trepp.com.

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Joe McBride
Trepp
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