CRE Debt Increase Hits 8-Year High

Woodwell says multifamily mortgage debt grew at the fastest pace since 1993.

WASHINGTON, DC—Commercial and multifamily mortgage debt outstanding at Dec. 31 increased at the fastest year-over-year pace since the peak of the previous cycle, the Mortgage Bankers Association said Monday. At the same time, though, the increase has not been uniform across all lending types. “During 2015, commercial and multifamily mortgage debt grew by the largest amount since the series began in 2007; multifamily mortgage debt grew at the fastest pace since that series began in 1993; and the amount of commercial and multifamily mortgage debt held in agency and GSE portfolios and MBS, and on bank balance sheets, grew more than in any previous year on record,” says Jamie Woodwell, VP of commercial estate research at MBA. “At the same time, the amount of mortgage debt held in CMBS continued to decline. While 2015 marked many new records, recent market and regulatory changes have the potential to impact the availability of commercial and multifamily mortgage debt during 2016.” MBA says the level of commercial/multifamily mortgage debt outstanding increased to $2.83 trillion in the fourth quarter of ’15. That figure was up 2.2% from the end of Q3, and 7% higher than at year-end 2014. An even faster pace was recorded for the level of multifamily mortgages alone, on both a quarter-to-quarter and Y-O-Y basis. It reached $1.06 trillion as Q4 ended, up 3.4% from Q3 and 10.4% from the year-ago period. Even as the total dollar amount for mortgage debt continued to rise, the distribution of that debt among the various lending channels shifted over the past 12 months as well as the most recent quarter. As Woodwell observes, the share of commercial/multifamily mortgage debt outstanding held in CMBS, CDO and other ABS issues declined 4% from a year ago, and 1% between Q3 and Q4. Securitized mortgages saw the biggest dollar decrease from the year prior, at $18.8 billion. And while CMBS, CDO and ABS represent the second largest holder of commercial/multifamily mortgage debt, their combined share has slipped: 18.2% of the total today, compared to 20.2% 12 months ago. Conversely, REITs saw the largest percentage increase Y-O-Y in their holdings of commercial/multifamily mortgages at 40%. Commercial banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt: an increase of $110 billion, or 11% between December ’14 and December ’15. Commercial banks also continue to hold the largest share of commercial/multifamily mortgages, currently with $1.08 trillion, or 38% of the total. These lenders also increased their share from a year ago, when they held 36.6% of all commercial/multifamily mortgage debt outstanding. Agency and GSE portfolios and MBS hold $461 billion, or 16.3% of the total commercial/multifamily mortgage debt outstanding, up seven-tenths of 1% from the year ago period. In terms solely of multifamily mortgages, agencies and GSEs hold the largest share at 43% of the total, or $461 billion. They also saw the largest dollar increase in their holdings of multifamily mortgage debt: $48.3 billion, or 12%. The quarterly increase in multifamily debt for agencies and GSEs was also the largest in dollar terms: an increase of $17.8 billion, or 4%.