Commercial, Multifamily Originations Post Mixed Results in Q1

In the first quarter of 2010, commercial and multifamily mortgage loan originations were 12 percent higher than the same period last year but 26 percent lower than the fourth quarter of 2009, the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm (MBA) reported Tuesday.

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According to MBA's ""Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations"":http://www.mortgagebankers.org/files/Research/CommercialOriginations/1Q10CMFOriginationsSurvey.pdf, first quarter origination volumes remained low on an absolute level, with significant variations between investor groups. MBA found that originations for commercial mortgage-backed securities (CMBS) conduits and life insurance companies increased dramatically on a percentage basis, while originations for Fannie Mae and Freddie Mac, which remained robust through the credit crisis, fell by almost half.

""The results of the survey showed changes in commercial and multifamily origination levels varied significantly between investor groups,"" said Jamie Woodwell, MBA's VP of commercial real estate research. ""However, it's hard to draw conclusions based on first quarter numbers given seasonal effects, such as the industry's usual push to finalize deals before the end of the year, resulting in lower first quarter origination activity.""

""Based on surveys from the Federal Reserve Board and discussions with lenders, there appears to be increasing

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capital available for commercial mortgages, but only limited demand for new mortgages from commercial and multifamily property investors,"" Woodwell continued.

According to MBA, the 12 percent year-over-year increase in commercial and multifamily lending activity in the first quarter was driven by increases in originations for office and retail properties. When compared to the first quarter of 2009, the surge in originations included a 98 percent increase in loans for retail properties, a 29 percent increase for office properties, a 5 percent increase in loans for multifamily properties, a 28 percent decrease in loans for industrial properties, a 46 percent decrease in hotel property loans, and a 68 percent decrease in health care property loans, MBA said.

Among investor types, loans for conduits for CMBS saw an increase of 657 percent compared to the first quarter of 2009, and there was also a 131 percent increase in loans for life insurance companies. However, loans for commercial bank portfolios fell by 4 percent , and the dollar volume of loans for Fannie Mae and Freddie Mac plummeted 49 percent.

Although first quarter originations increased from last year, it was a different story on a quarter-to-quarter basis, as mortgage originations fell 26 percent from the fourth quarter of 2009. While office properties saw a 29 percent increase in originations from one quarter to the next, there was an 11 percent decrease for retail properties, a 24 percent decrease for industrial properties, a 37 percent decrease for multifamily properties, a 73 percent decrease for hotel properties, and a 91 percent decrease for health care properties, MBA said.

As for investor types, loans for conduits for CMBS saw an increase in loan volume of 430 percent from the fourth quarter of 2009 to the first quarter of 2010, and loans for life insurance companies saw in increase in volume of 1 percent. During the same period, loans for commercial bank portfolios tumbled 48 percent, and originations for Fannie Mae and Freddie Mac plunged 43 percent.