CRE Debt Outstanding Approaches $3 Trillion

Commercial and multifamily mortgage debt outstanding went up to $2.95 trillion at the end of 2006, a 12.7% increase from the end of 2006, the Mortgage Bankers Association reports. The mortgage bankers trade group said, based on an analysis of Federal Reserve data, that in the fourth quarter alone, commercial and multifamily mortgage debt outstanding increased by $99 billion, or 3.5%. Multifamily debt outstanding stood at $731 billion at the end of 2006, an increase of 7.5% over the year, and $15 billion, or 2.1%, in the fourth quarter alone.

In percentage terms, real estate investment trust holdings of commercial and multifamily mortgage debt outstanding rose the most, at 36%, last year, while pension fund holdings declined the most.

Jamie Woodwell, MBA's senior director for commercial/multifamily research, said, "The most recent Federal Reserve Beige Book characterized commercial real estate markets as strong, solid and firming. We also see low delinquencies and other signs of mortgage performance continuing to show strength."

Commercial banks continue to hold the largest share of commercial/multifamily mortgages, with almost $1.3 trillion, or 44% of the total (commercial bank holdings also include "commercial and industrial loans" on which commercial property is the collateral.

Commercial mortgage-backed securities, collateralized debt obligations and other asset-backed securities pools are the second largest holders of commercial/multifamily mortgages, with $630 billion, or 21% of the total. Life insurance companies hold $284 billion, or 10 % of the total, and savings institutions hold $203 billion, or 7% of the total.

Government-sponsored enterprises and agency- and GSE-backed mortgage pools, including Fannie Mae, Freddie Mac and Ginnie Mae, hold $140 billion in multifamily loans that support the mortgage-backed securities they issue and an additional $80 billion "whole" loans in their own portfolios, for a total share of 7% of outstanding commercial/multifamily mortgages.

Considering just multifamily mortgages, the GSEs and Ginnie Mae hold the largest share of multifamily mortgages - with $140 billion in agency- and GSE-backed mortgage pools and $80 billion in their own portfolios - at 30% of the total multifamily debt outstanding.

They are followed by commercial banks with $160 billion, or 22% of the total; CMBS, CDO and other ABS issuers with $103 billion, or 14% of the total; savings institutions with $96 billion, or 13% of the total; state and local governments with $61 billion, or 8% of the total; and life insurance companies with $45 billion, or 6% of the total.

Between December 2005 and December 2006, commercial banks saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt, an increase of $161 billion, or 14%.

CMBS, CDO and other ABS issuers increased their holdings of commercial/multifamily mortgages by $108 billion, or 21%, while life insurance companies saw their holdings rise $17 billion, or 7%.

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