JLL: possible post-recession lending market high in 2014.


Commercial property lending continues to gain momentum and could reach a new post-recession high this year, reported Jones Lang LaSalle (JLL), Chicago.

Tom Fish. Jones Lang LaSalle executive managing director and member of the Mortgage Bankers Association's (MBA's) Commercial Real Estate/Multifamily Finance Board of Governors (COMBOG), said real estate fundamentals have improved thanks to growth in housing markets, construction, industrial production and consumer confidence as well as disciplined underwriting standards.

"The convergence of these factors leads us to an optimistic 2014 forecast for the real estate lending markets," Fish said.

Jones Lang LaSalle pointed to several dynamics pushing debt liquidity into high performance this year, including "substantial" capital looking for product and a broad range of investors that have announced intentions to make fresh commitments in 2014. And more commercial property product will likely come to market this year from "harvest sellers" seeking to capitalize on the current market cycle.

In addition, money has flowed into real estate from commercial mortgage-backed securities [CMBS], according to JLL's Cost 0/Capital report. U.S. CMBS issuance peaked in 2007 at $230 billion before dropping off with the recession. CMBS issuance reached a post-recession high last year at $86.1 billion, up 78 percent from 2012 issuance.

Highly rated CMBS spreads also remain low and stable from a historical perspective, tightening by 20...

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