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CRE Originations Off a Quarter

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Mortgage Daily

                                                 May 5, 2011

While quarterly commercial mortgage production fell an estimated $12 billion from the final quarter of last year, every facet of the business has improved compared to a year ago. Life insurers, multifamily lenders and industrial property originators have more than doubled originations during the past 12 months — and private-label securitizations are up more than 400 percent.

Those findings were derived from the Mortgage Bankers Association’s Quarterly Survey of Commercial-Multifamily Mortgage Bankers Originations for the first-quarter 2011.

MBA said total commercial real estate originations fell 25 percent between the fourth-quarter 2010 and the first quarter of this year.

Compared to the first-quarter 2010, however, commercial real estate originations have risen 89 percent.

An analysis of MBA’s data suggests that first-quarter CRE production amounted to around $34.8 billion, tumbling from roughly $46.7 billion in the final quarter of last year.

The analysis indicated that commercial mortgage fundings came in at approximately $18.4 billion in the first-quarter 2010.

The quarter-over-quarter decline in commercial mortgage production was led by conduit volume — which was down 58 percent. But conduit originations were more than five times the level of fundings closed a year prior.

Also hurting quarter-over-quarter production was agency business; activity at Fannie Mae and Freddie Mac fell 45 percent. In line with the government-sponsored enterprise decline was a 28 percent drop in industry-wide multifamily business.

Life insurance company volume was down 15 percent from the fourth quarter.

By property type, health-care mortgages tumbled 83 percent, retail financing sank 48 percent and hotel volume was down 44 percent. Office property production was off 14 percent.

Commercial banks managed to push commercial mortgage originations up 20 percent from the fourth quarter.

The only property type to experience increased originations from the final period of last year was industrial, which was up 12 percent.

All property and originator types experienced strong annual improvements, with a 465 percent improvement noted in hotel financing volume since the first-quarter of last year, a 391 percent improvement in conduit production and a 194 percent jump in industrial originations.

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