Commercial Real Estate Debt Levels Fall — Again

March 18, 2011

Commercial Real Estate Debt Levels Fall — Again

Mortgage Bankers AssociationThe level of commercial mortgage debt fell by $12.1 billion during the last three months of 2010, marking the fifth straight quarter that the amount of debt backing commercial real estate has fallen, according to data released Thursday by the Mortgage Bankers Association.

In all, there was $2.4 trillion in commercial mortgage debt outstanding — sitting on the books of everything from banks to insurance companies to holders of commercial mortgage backed securities — at the end of the year, the MBA said.

Debt Forecast

While the level declined, it fell by the lowest amount since the end of the third quarter in 2009 as banks began to wade back into the lending world. Still, it’s hard to think that overall debt will grow any time soon, with countless properties holding outsized billions upon billions of loans made in 2006 and 2007. As those loans come due or are worked out, their debt loads tend to shrink.

Commercial real estate debt is a broad category that includes mortgages tied to office space, hotels, apartments, retail and industrial property. Broken down, the amount of multifamily lending actually increased by $3 billion — the second straight quarter that it grew — as U.S.-backed Fannie Mae and Freddie Mac enlarged their portfolios.

Source:  The Wall Street Journal

By: Eliot Brown

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