Commercial Lending Bounces Back In 2010 – CoStar Group

More signs of increased multifamily investingPowered by improving conditions in the real estate and capital markets, CRE loan originations rose by 36% in 2010 over the previous year, according to preliminary data released at this week’s Mortgage Bankers Association (MBA) real estate finance convention in San Diego. In a separate report, the MBA also found that loan maturities continue to roll at a manageable level, with just 11% of the $1.4 trillion in outstanding commercial debt expected to mature this year, shrinking to 9% in 2012.

“All the fundamentals are ripe for a very positive, solid comeback, especially in the multifamily sector,” Faron Thompson, who attended the conference as the newest addition to Jones Lang LaSalle’s real estate investment finance team, tells CoStar.

Mortgage bankers originated $110 billion of commercial and multifamily mortgages during 2010, with a strong fourth quarter powering an increase of 36% from 2009, according to preliminary estimates based on the MBA Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released at the conference this week.

The results show that loan production by life insurance companies sprang back to life in 2010. Life companies were the leading source of lending, with origination volumes 155% higher than 2009 levels. Government-sponsored enterprises Fannie Mae, Freddie Mac and FHA/Ginnie Mae also saw strong volumes, with increases for FHA/Ginnie Mae offsetting declines in production for Fannie Mae/Freddie Mac. Total originations for commercial mortgage-based securities (CMBS) conduits increased more than 10-fold in 2010 while originations for commercial banks saw a year-over-year decline.

CB Richard Ellis Group Inc. posted an increase of 233% in its commercial mortgage brokerage business, driven by loan originations and strong GSE activity as well as improvements on the parts of traditional and conduit lenders, said CFO Gil Borok during the Los Angeles-based company’s fourth-quarter conference call.

Originations jumped 63% in the fourth quarter over the previous three months and 88% over fourth-quarter 2009, pushing totals above 2009 levels, said Jamie Woodwell, MBA’s vice president of commercial real estate research. The late rally was driven by increases in originations for office properties, which rose 170% over the same period a year earlier; and hotels, which rose 169%. Loans for industrial properties, retail and multifamily rose 98%, 94% and 81%, respectively. Health-care lending was flat at 4%.

Origination volumes typically grow over the course of the year and changes between the third and fourth quarters are likely driven at least in part by seasonal factors. However, among investor types, CMBS saw an increase in loan volume of 298% compared to the third quarter, by far the largest quarterly jump. The next-largest increase, origin

via Commercial Lending Bounces Back In 2010 – CoStar Group.

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