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Tuesday, 14 May 2019

1Q Lending Activity Dropped 34 Percent from 4Q

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Commercial Real Estate Direct Staff Report

Choppy market conditions late last year and into this year drove a 34 percent decline in commercial mortgage lending activity in the first quarter, when compared with the fourth quarter, according to the Mortgage Bankers Association.

But the first-quarter volume was up 12 percent from the same period a year ago, as every investor type, save CMBS conduit lenders enjoyed healthy lending activity.

The Washington, D.C., trade group conducts a survey of its lender members every quarter to gauge overall origination activity and uses that to build an index that was set to 100 in 2001. It hit its cyclical high in the fourth quarter, reaching 342, up from last year's 300. In the first quarter, it was 224, which compares with the 200 posted the same time a year ago.

Conduit lenders were walloped by widening bond spreads late in the fourth quarter, which impacted their ability to write loans on a consistently profitable basis. So, many simply pulled back. The proof: Their first-quarter lending index value was 76, down 22 percent from the fourth quarter's 97 reading. Lending activity generally is slowest during the first quarter.

Conduits' latest activity was down 4 percent from a year ago.

Things have turned around, however, as some conduit lenders have reported healthy profits from their CMBS loans.

They were the only major investor type to pull back in the first quarter, relative to a year ago. The two housing-finance agencies, Fannie Mae and Freddie Mac, saw a 14 percent increase in lending during the first quarter, when compared with a year ago. That volume, however, was down 43 percent from the fourth quarter.

Life insurance companies saw a 7 percent increase in their quarter-over-quarter activity, but a 28 percent decline when compared with the fourth quarter. And commercial bank lending was up 6 percent in the first quarter, when compared with a year ago, and down 34 percent when compared with the fourth quarter.

Lending against industrial properties ballooned during the latest period, likely the result of a couple of outsized portfolio transactions. Activity was up 73 percent from a year ago. Lending against multifamily and office properties was up 9 percent, and against hotels it was up 14 percent.

Comments? E-mail Orest Mandzy or call him at (267) 327-4281.



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“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

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Additional Info

  • Syndicate to Realpoint: No
  • Subject: Mortgages/Financing (MOR), Research (RES)
  • Company: Mortgage Bankers Association of America
  • Private: No
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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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