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HFF Research Update for June 9, 2016: Secretariat

Thursday, June 09, 2016

Weekly insights on current research in the commercial real estate industry from HFF Managing Director of Research Jimmy Hinton. View Daily Rates on the HFF website or access the HFF Daily Rates App in iTunes.

On this day in 1973, Secretariat became the ninth winner of the Triple Crown and the first in a quarter century. Secretariat earned $155,000 for winning the Kentucky Derby in 1973. This year, Nyquist earned $1.631 million for the same feat. Talk about inflation!

The measure of inflation on a different data point has turned investors’ heads today. Consumer inflation in China eased in May for the first time in eight months, sending investors to fixed income. Meanwhile, Mario Draghi has commenced purchasing more than a trillion Euros worth of corporate and sovereign bonds, suppressing yields. “How low?” you ask.

Yields on Germany’s 10-year bond touched 0.029 percent this morning – its lowest effective yield ever. And for the first time ever, the average yield of bonds across the maturity scale has reached negative territory. Such compression of sovereign bond yields has driven the nominal amount of bonds yielding negative rates to a record high this month.

This should sustain foreign-based interest in higher yielding assets supported by transparent/expanding economies: namely U.S. commercial real estate.

Domestically, borrowers are the beneficiary, with the yield on the 10-year UST hitting an intraday low of 1.6575 percent in the early trading hours of Thursday’s session.

yields on the 10-year UST

This low yield represents the lowest yield on the 10-year UST since January 30, 2015.

Make hay!

Lowest 10-year UST since January 30, 2015

Daily rates for June 9, 2016

About Jimmy Hinton

HFF Jimmy HintonMr. Hinton serves as Managing Director of HFF, responsible for the firm’s national research efforts. Mr. Hinton works with the executive management team to assist in investor relations and to inform both HFF staff and firm clients with in-depth analysis of economic, property and capital market trends. He is also responsible for providing extensive market reports, client presentations and deal-specific analysis for debt placement and investment sales assignments. Mr. Hinton’s responsibilities include substantial interaction with pension funds, life insurance companies, regional and CMBS lenders, REITs, foreign investors and private equity funds.

During his tenure at HFF, Mr. Hinton has supported the execution of more than 150 commercial real estate transactions totaling more than $4.5 billion in 20 states. Mr. Hinton has experience in fixed- and adjustable-rate debt, mezzanine debt, construction loans and joint venture executions on behalf of clients engaged in the acquisition, development and recapitalization of property types including multi-housing, industrial, office, retail, medical office and storage properties.


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