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The level of commercial/multifamily mortgage debt outstanding increased by $28.6 billion in the third quarter of 2014, as the four major investor groups increased their holdings. That is a 1.1 percent increase over the second quarter of 2014. Total commercial/multifamily debt outstanding stood at $2.59 trillion in the third quarter. Multifamily mortgage debt outstanding rose to $940 billion, an increase of $16 billion, or 1.7 percent, from the second quarter of 2014.
“The amount of commercial and multifamily mortgage debt outstanding rose to a new record high in the third quarter,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “The quarter-over-quarter increase was the highest since 2008, and the rise in multifamily mortgage debt was the highest since 2007. Strong originations are more than outpacing the low volume of loans maturing this year.”
The analysis summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under Life Insurance Companies) and in commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset backed securities (ABS) for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues).
CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $535 billion, or 21 percent of the total. Agency and GSE portfolios and MBS hold $400 billion, or 15 percent of the total, and life insurance companies hold $351 billion, or 14 percent of the total. Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the “CMBS, CDO and other ABS” category.
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $400 billion, or 43 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $289 billion, or 31 percent of the total. State and local governments hold $82 billion, or nine percent of the total; CMBS, CDO and other ABS issues hold $74 billion, or eight percent of the total; life insurance companies hold $55 billion, or six percent of the total, and non-farm, noncorporate business holds $15 billion, or two percent of the total.
In the third quarter of 2014, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt—an increase of $13.7 billion, or 1.5 percent. Agency and GSE portfolios and MBS increased their holdings by $7.8 billion, or two percent, and life insurance companies increased their holdings by $5.5 billion, or 1.6 percent. REITs saw the largest decrease at $2.1 billion, or down 5.4 percent.
In percentage terms, state and local government retirement funds saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 19 percent. REITs saw their holdings decrease five percent.
The $16 billion increase in multifamily mortgage debt outstanding between the second and third quarter of 2014 represents a 1.7 percent increase. In dollar terms, commercial banks saw the largest increase in their holdings of multifamily mortgage debt, an increase of $7.8 billion, or 2.8 percent. Agency and GSE portfolios and MBS increased their holdings of multifamily mortgage debt by $7.8 billion, or 2.0 percent. REITs increased by $1.1 billion, or 58.4 percent. State and local government saw the largest decline in their holdings of multifamily mortgage debt, by $1.7 billion, or down two percent.
In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages, at 58 percent. Finance companies saw the biggest decrease, at four percent below the second quarter.