Deutsche Bank Q1 CRE Outlook

I was going through old documents and came across Deutsche Bank’s Q1 commercial real estate outlook. It’s about two months old now, but it has some good info so I figured better to post it late than never. The file, which is embedded below, contains some very good data on CMBS, loan maturities, and a host of other indicators, much of which is put into some historical context through charts.

My favorite data though is the spreadsheet showing why prices have declined 35%. Much of the data focuses on what is happening behind the scenes, but where the rubber hits the road is the proforma. I have talked about price declines of 30-35%+ being the norm in the past, but the file contains a good spreadsheet explaining how new underwriting assumptions have affected values, as well as what happens when the new assumptions are blended with a 15% drop in NOI. We can see that 45% price declines are by no means out of touch with reality, particularly when you consider the softness in rents.

That single slide’s data can be viewed here:

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