MBA: Commercial real estate debt outstanding grows at record pace

Commercial real estate debt outstanding grew at the fastest quarterly rate in seven years in the fourth quarter of 2014, according to a new report from the Mortgage Bankers Association (MBA). Outstanding debt increased from the third quarter by $48.9bn, or 1.9 percent, to $2.64tr. The previous record was a 3.7 percent increase between the third and fourth quarters of 2007. Three of the four major investor groups were responsible for the hike.

Commercial real estate debt outstanding grew at the fastest rate in seven years between the third and fourth quarters of 2014, according to a new report from the Mortgage Bankers Association (MBA).

Outstanding commercial/multifamily mortgage debt increased from the third quarter by $48.9bn, or 1.9 percent, to $2.64tr. The previous record was a 3.7 percent increase between the third and fourth quarters of 2007. Three of the four major investor groups were responsible for the hike.

Jamie Woodwell
Jamie Woodwell

“Led by growth in loans on multifamily properties, banks, the GSEs and life insurance companies all increased their books of business by more than five percent during the year and by more than two percent during the fourth quarter alone,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research.

Multifamily mortgage debt outstanding alone increased $23.7bn to $964bn, a 2.5 percent increase.

“Rising property values, improving fundamentals and low interest rates all contributed to the growth,” Woodwell said.

The analysis — which factored in whole loans, commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset-backed securities — also showed that debt outstanding was $119.5bn, or 4.7 percent, higher at the end of last year than it was at end of 2013.

Of the $2.64tr total, commercial banks continued to hold the largest share of debt outstanding, with $967bn, or 37 percent. CMBS, CDOs and other asset-backed securities issues were next in line, with $533bn, or 20 percent of the total. Agency and GSE portfolios and mortgage-backed security (MBS) held $412bn, followed by life insurance companies, with $359bn.

Among other key findings, agency and GSE portfolios and MBS held the largest share of multifamily mortgage debt, with $412bn. That group also saw the largest quarterly increase in holdings of multifamily debt, rising $12.5bn, or 3.1 percent; while bank and thrifts saw the largest increase in holdings of commercial/multifamily mortgage debt, with a $23bn, or 2.5 percent, increase.

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