Posts (RSS)Commercial Property Loans Down from 2008, Up from 1st Q
The pace of multifamily and distressed commercial property lending slowed down in the second quarter, compared to the second quarter last year, but increased compared to the first quarter of 2009, based on a report from the Mortgage Bankers Association.
The number of commercial and multifamily loans increased by 50 percent from the first quarter, but decreased by 54 percent from the second quarter of 2008 and dropped by 83 percent from the peak second quarter level in 2007.
Jamie Woodwell, vice president for commercial property research at MBA, explained that traditionally second quarters show increases in commercial loan originations. He added that the substantial rate of increase means that multifamily and commercial lending slowed down in the first quarter.
Compared to the second quarter of last year, the 54-percent decrease was an overall representation of decreases in loans for various commercial property types. Loans for office buildings decreased by 81 percent, loans for hotels dropped by 77 percent, loans for medical buildings fell by 70 percent, loans for industrial buildings dropped by 65 percent, loans for retail properties decreased by 51 percent and loans for multifamily properties fell by 21 percent.
Significant decreases were also experienced in loans classified by investor types compared to the second quarter of 2008. Commercial bank portfolios dropped by 83 percent, loans for commercial mortgage-backed securities conduits fell by 57 percent and loans for life insurance firms fell by 54 percent. Only loans for government sponsored enterprises increased, with an uptick of 2 percent.
Compared to this year’s first quarter, increases were experienced among loans classified by investor types. Loans for life insurance firms rose by 46 percent, loans for GSEs climbed up by 39 percent and commercial bank loan portfolios increased by 6 percent. Loans for CMBS conduits rose by a staggering 471 percent.
Compared to the same quarter, loan originations for retail properties increased by 93 percent, loans for multifamily properties rose by 73 percent, loans for office buildings increased by 28 percent and loans for industrial buildings climbed up by 46 percent. Loans for hotels and medical buildings increased by significant percentages, with medical property loans rising by 173 percent and hotel development loans increasing by 129 percent.
In a related report, commercial property sales involving institutional investors fell by 18.1 percent in the second quarter from the first quarter and down by 32 percent from the second quarter of 2008, according to the Massachusetts Institute of Technology Center for Real Estate.