2006 commercial/multi-family originations up 10 percentMortgagePress.comMortgage Bankers Association, commercial mortgage-backed securities, collateralized debt obligations, asset-backed securities
The commercial/multi-family originations market grew 10 percent
in 2006, with mortgage bankers closing $406.1 billion in
commercial/multi-family loans according to the Mortgage Bankers Association (MBA)
2006 Commercial Real Estate/Multi-Family Finance: Annual
Origination Volume Summation. Increases were seen across every
property type, as well as most investor groups, and were led by
increases in loans for office buildings and loans intended for
commercial bank and savings institution portfolios.
"The $406 billion in originations volume in 2006 marked a new
high," noted Jamie Woodwell, MBA's senior director of
commercial/multi-family research. "Conduits packaging loans for
commercial mortgage-backed securities (CMBS), collateralized debt
obligations (CDOs) and other asset-backed securities (ABS)
continued to be the dominant investor group in 2006, and office
properties surpassed multi-family as the dominant property
type."
The increase in originations from 2005 to 2006 was driven by
both higher loan amounts - with the average loan size rising to
$11.5 million - and by a greater number of loans being closed. Loan
amounts rose in tandem with property valuations - valuations that
increased both in the property sales market and in loan
underwriting. In general, the availability of funds for
commercial/multi-family real estate has been part of an
economy-wide availability of capital.
CMBS, commercial real estate CDOs and ABS were the largest
single investor group for these mortgages - buying $185.6 billion,
or 46 percent of the closed loan volume. Office buildings were the
dominant property type - representing $104 billion, or 26 percent
of the lending total.
Among major investor groups, real estate investment trusts saw
the greatest percentage increase in volume between 2005 and 2006,
followed by commercial banks/thrifts, Freddie Mac, life insurance
companies, Fannie Mae and CMBS, as well as CDO and other ABS
conduits.
Lending for multi-family properties, which had been the leading
property type for originations in 2005, fell to second behind
office property originations. Lending to multi-family properties
grew by just one percent between 2005 and 2006. Lending for office
properties, retail, industrial, hotel/motel and health care all saw
greater growth.
Intermediated loan volume and closed loan volume each grew at
the same 10 percent rate between 2005 and 2006.
Seconds/mezzanine/preferred-equity financing grew by 21
percent.
For more information, visit www.mbaa.org.
