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SAN DIEGO-During the Commercial Real Estate/Multifamily Housing Convention here this week, the Mortgage Bankers Association projected originations of commercial and multifamily mortgages will grow to $254 billion this year, an increase of 11% from 2012, and will continue to rise to $289 billion in 2015. Originations of multifamily mortgages are forecast at $100 billion this year, MBA reports.
Also, the association reports a 21% drop in volume of commercial and multifamily mortgages maturing this year, with $119.5 billion—8% of the outstanding balance—of commercial and multifamily mortgages held by non-bank lenders and investors set to mature in 2013. Loan maturities vary significantly by investor group, with 5% of the outstanding balance of multifamily and healthcare mortgages held or guaranteed by the GSEs maturing and life insurance companies seeing 7% of their outstanding mortgage balances mature. Among loans held in CMBS, 7% will come due in 2013, and 21% of commercial mortgages held by credit companies and other investors maturing this year.
“During the recession, and even in more recent years, approaching commercial and multifamily mortgage maturity volumes were referred to as akin to a 'ticking time bomb' that would overwhelm the real estate finance markets,” said Jamie Woodwell, MBA's VP of commercial real estate research, in a prepared statement. “The volume of loans maturing in 2013 and 2014 will mark cycle lows for loan maturities, each representing less than 8% of the outstanding balance of loans.”
Also, commercial and multifamily mortgage originations increased 49% between the third and fourth quarters of 2012, MBA reports, and originations were up 49% compared to the fourth quarter of 2011. MBA's commercial/multifamily mortgage bankers originations index shows originations for the full year 2012 were 24% higher than in 2011.
In addition, while the government-sponsored enterprises that include Fannie Mae and Freddie Mac will continue to dominate the financing landscape for multifamily properties in 2013, life companies, national banks, financial institutions and CMBS are expected to further increase their market share in the year ahead, according to Jones Lang LaSalle.
“Plentiful capital, ease of execution and the 'sweet spot' in the seven- and 10-year fixed-rate, 80% LTV financings kept the agencies on top in 2012, with Freddie Mac sourcing roughly $29 billion and Fannie Mae topping out around $33 billion,” according to Faron Thompson, international director and leader of Jones Lang LaSalle's Freddie Mac Program Plus lending business.
As GlobeSt.com previously reported, Fannie Mae and Freddie Mac continue to fuel the market as a source of lending for the exit of development projects, while construction lenders have stepped up at the dirt level, according to JLL. Favorable interest rates and attractive capital made development in the wake of the downturn possible for this sector. As the multifamily market continues to expand in 2013, the NMHC expects that most markets will adjust to the changing landscape of needs.
As GlobeSt.com also previously reported, David H. Stevens, MBA's president and CEO, gave a keynote speech during the CREF conference this week in which he said that delinquencies are down and originations are up. He added that the industry has seen steady growth since 2009, with $2.4 trillion in outstanding commercial and multifamily debt—a number that continues to grow.
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*Chart courtesy of Jones Lang LaSalle.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
