NEW YORK CITY—Federal Reserve chair Janet Yellen's speech Wednesday before the Economic Club of Washington provided further evidence that the Fed is likely to begin increasing the federal funds rate at its next monthly meeting. With an impending rate hike in mind, Integra Realty Resources sounded out 64 commercial real estate lenders and underwriters recently for IRR's first-ever survey of the rate spread landscape, in the process identifying the riskiest property types across each asset class.

Within the multifamily category, for instance, student housing loans present the highest risk to lenders, with financing higher than that for multifamily primary location assets by an average of 21 basis points. The gap between the two property types widens to an average of 28 bps in the case of deals with loan-to-value ratios ranging between 50% and 60%. Minimum spreads for student housing are the widest regardless of LTV.

On average, according to IRR's survey, loans for multifamily secondary locations were financed nine bps higher than those for primary locations during the third quarter. Interest rate spreads for primary locations showed an average lift of 36 bps when financing deals with an LTV of 50% to 60% to deals with an LTV of 61% to 75%.

In the office sector, the widest average spreads can be found in single-tenant non-credit properties in three of the four LTV ranges. For the highest LTV category, 76% to 85%, that distinction falls to multi-tenant suburban properties, with spreads averaging 321 bps compared to 292 for single-tenant non-credit. Conversely, multi-tenant CBD office property loans were financed with lower spreads across all LTV ranges except on deals with an LTV of 76% to 85%.

Within the realm of office properties, medical office loans were characterized by tight spreads during Q3. IRR cites a marginal (15 bps) lift when financing deals with an LTV of less than 50%, compared to those with an LTV ranging between 61% and 75%.

For retail, IRR's survey found that unanchored properties were financed with interest rate spreads averaging 35 bps higher than grocery-anchored properties during Q3. Financing of unanchored retail properties had a median interest rate spread of 264 bps during the quarter. Single-tenant credit properties were financed with interest rate spreads that were only seven bps higher than spreads on single-tenant non-credit properties. The widest average spreads across the LTV range in retail were for loans on outlet centers, ranging as high as 363 bps for deals with 76% to 85% LTVs.

Spreads in the industrial category were widest in Q3 for flex R&D properties, which were financed with interest rate spreads of 17 bps higher than distribution warehouse properties and seven bps higher than manufacturing properties. Financing of distribution warehouse properties—the bread-and-butter of the sector—had a median interest rate spread of 228 bps during Q3.

Among hotel assets, luxury properties were financed with the highest spreads compared to all other hospitality property types, except on deals with an LTV of 50% to 60%. On average, luxury properties were financed with interest rate spreads of 19 bps higher than full-service properties and 11 bps higher than limited service.

Senior housing and self-storage properties incurred relatively modest increases—25 bps and 40 bps, respectively—on interest rate spreads from deals with an LTV of 50% to 60% compared to those with an LTV of 61% to 75%. Senior housing properties were financed with interest rate spreads that averaged 23 bps higher than those for self-storage properties.

IRR conducted its survey of lenders and underwriters between Oct. 5 and Oct. 23. The firm asked respondents to provide the maximum and minimum financing rate spread in basis points over the 10-year Treasury rate for deals they had underwritten over the preceding three months.