Outstanding CRE debt fell during Q2

Commercial real estate debt dropped in the second quarter.

Property management companies have been able to pay down outstanding debt this year, as the total figure for commercial and multifamily mortgages dropped more than $10 billion during the second quarter, according to a report from the Mortgage Bankers Association.

The total decline of 0.4 percent compared to the first quarter included commercial mortgage-backed securities, collateralized debt obligations and asset-backed securities. Overall, the total debt outstanding was approximately $2.37 trillion, the report explained.

"CMBS loans paid-off, paid-down and were liquidated at a far faster pace than new CMBS loans were originated during the quarter," said Jamie Woodwell, MBA’s vice president of commercial real estate research. "The drop in CMBS balances more than offset the increases in holdings by Fannie Mae, Freddie Mac and FHA, banks and life insurance companies."

Multifamily mortgage debt increased 0.7 percent to $826 billion, according to MBA. This was $5.4 billion more than the first quarter's level. When splitting up multifamily mortgage debt, more than 40 percent belonged to government-sponsored enterprises, while banks and thrifts held approximately one-quarter of the figure. Both CMBS and ABS, as well as CDOs had 10 percent of the figure. Federal, state, local governments and life insurers held the remainder, which was less than 10 percent each.

Private pension funds experienced the most loans taken on during the quarter by percentage. The report explained that this group had a rise of nearly 9 percent. Additionally, ABS, CDO and CMBS had the most significant decline, of more than 5 percent.

Commercial mortgage debt mostly in possession of banks
A total of $815 billion of all commercial and multifamily mortgages were held by commercial banks, the report said. This was one-third of the entire total. The next largest category was loans in the possession of CMBS, ABS and CDOs, which had 23 percent of the total figure. Government-sponsored enterprises and related agencies had 15 percent of the total, with life insurance companies at nearly the same figure.

The report added that residential homes had the most significant decline in mortgage debt, as this sector fell more than 13 percent. However, non-life insurance companies had a rise of more than 4 percent, which was the largest in any category during the second quarter when compared to the previous quarter's figure.

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