WASHINGTON, D.C. — Commercial and multifamily loan originations increased 36 percent in the first quarter compared to the same period last year, according to newly released data from the Mortgage Bankers Association. The largest gains in lending activity were in the healthcare, retail and multifamily sectors. Loan originations for healthcare properties spiked 118 percent, retail loans increased by 109 percent and loans for multifamily rose by 45 percent.
“Multifamily lending is being buoyed by the overall strength in multifamily markets — with strong fundamentals supporting property incomes and values,” explains Jamie Woodwell, MBA’s vice president of commercial real estate research. “Lending on healthcare properties also increased significantly, on a percentage basis, showing a rise from the relatively low volumes at the beginning of last year.”
There were also decreases in loan originations in the office, industrial and hotel sectors in the first quarter of 2012 compared with the same period last year. Hotel loans decreased by 7 percent, office loans were down 9 percent and industrial loans slumped by 32 percent.
Among investor types, loans from commercial bank portfolios increased by 104 percent and loans from government-sponsored enterprises (GSEs) posted a 40 percent increase when compared to the first quarter of last year. Life insurance companies and conduits for CMBS both saw a 10 percent decline.
The overall gain in commercial and multifamily originations from this time last year is part of the ongoing rebound from the Great Recession, according to Woodwell.
“Borrowing and lending on commercial and multifamily properties continues to rebound from the lows seen during the Great Recession,” said Woodwell. “The low interest rates and stabilization in commercial real estate fundamentals that raised origination levels by 55 percent in 2011 are continuing to buoy activity in 2012.”
Volume ebbs and flow
Overall, first-quarter commercial and multifamily loan originations posted a 12 percent decrease compared to the fourth quarter of 2011, reflecting the typical push for the industry to finalize deals before the end of the year and the usual drop-off in first-quarter volume, says MBA officials.
The volume of loan originations in some property sectors increased in the first quarter of 2012 compared to the fourth quarter of 2011. Retail loans jumped 17 percent and office properties rose 4 percent. Most property types posted a decrease, however. Hotel originations drooped 1 percent, multifamily originations fell 22 percent, industrial originations decreased by 50 percent and healthcare originations fell 53 percent.
Among investor types, commercial bank portfolios posted an 11 percent increase in the first quarter of 2012 compared with the fourth quarter of 2011, while life insurance companies increased originations by 2 percent. Conduits for CMBS decreased their originations by 25 percent and GSEs posted a 33 percent decrease.
— John Nelson