New Mortgage Bankers Association (MBA) research examines key commercial and multifamily mortgage financing sources and the issues that will shape lending. [paragraph] "A number of market and regulatory factors are impacting the commercial and multifamily real estate finance markets," said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. "As just one example, in the past month [February], several Wall Street analysts have reduced their expectations for 2016 commercial mortgage-backed securities [CMBS] issuance by 25 percent to 30 percent."
Woodwell said the MBA Research Datanote, Sources of Commercial and Multifamily Mortgage Financing in 2016, examines major commercial real estate lending sources and the market and regulatory changes that could affect their lending appetite in the coming months.
According to the MBA Datanote, office buildings, apartment buildings, shopping malls, warehouse facilities and other income-producing commercial real estate assets are supported by nearly $3 trillion in mortgages. The availability of this financing fosters investment, distributes investment risk and return, and reduces the cost of building and maintaining properties, thus reducing end-user costs.
The nearly $3 trillion commercial real estate finance industry draws capital from a variety of sources, including bank balance sheets, securitization markets, government-sponsored enterprises (GSEs) and life insurance company investment portfolios. These assorted sources bring competition, a diversity of appetites and a variety of options to the market. But they also bring a variety of potential market and regulatory challenges.
Commercial and multifamily mortgage borrowing and lending have been strong in recent years, with nearly $500 billion in mortgage banker originations last year, which brought commercial and multifamily mortgage debt outstanding to $2.8 trillion.
Commercial real estate finance markets are large and diverse. Banks' balance sheets are the largest and fastest-growing source of commercial real estate mortgage financing. The CMBS market, at roughly half the size of the banks and shrinking, is the second-largest source of commercial...