Commercial debt outstanding rises during Q3

Commercial outstanding debt rose last quarter.

Outstanding debt for the commercial and multifamily market increased during the third quarter, which may mean that more lenders are willing to give financial aid to property management companies.

The total level of commercial and multifamily mortgage debt outstanding during the third quarter was $6.6 billion more than during the second quarter, according to the Mortgage Bankers Association. This was an increase of 0.3 percent.

Commercial and multifamily debt held by mortgage-backed securities and government-sponsored enterprises Freddie Mac and Fannie Mae, increased 2.6 percent, or a total of $9.4 billion, the report explained. Those loans held by thrifts and financial institutions increased 0.5 percent, for a total gain of $4.4 billion.

Multifamily mortgages had $369 billion held in GSEs and MBSs, which was nearly half of all outstanding debt for the sector, according to the report. Banks and thrifts totaled nearly 30 percent of this type of outstanding debt, which was $228 billion. CMBS, as well as collateralized debt obligations and asset-backed securities held 9 percent of the figure, altogether. The federal government accounted for another 2 percent of this total, while non-federal levels of government had 6 percent.

"The overall amount of commercial and multifamily mortgage debt continues to grow," said Jamie Woodwell, vice president of commercial real estate research for MBA. "Fannie Mae, Freddie Mac, FHA, life insurance companies and banks are all increasing their holdings and/or guarantees of commercial and multifamily mortgages.  And for the fourth quarter in a row, the net increase by these and other investor groups has outpaced a decline in the balance of commercial and multifamily mortgages held in commercial mortgage backed securities."

Multifamily vacancies may rise next year
With increased commercial and multifamily outstanding debt, more property management companies may be developing properties. According to a report from CBRE Group, the level of multifamily vacancies should rise slightly next year mainly because of new developments and slightly lower demand.

For the entire 2012 year, the figure will likely be 5 percent, the report explained. While the multifamily vacancy rate was 4.5 percent during the third quarter, this should continue to rise to 5.3 percent next year. However, by 2014, this may trend down again slightly, as the projection for that year is approximately 5.2 percent.

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