Commercial & Multifamily Mortgage Debt Nears $3.5 Trillion

Outstanding commercial and multifamily debt grew by $45.4 billion in first-quarter 2019, or 1.3% more than the volume of debt in the prior quarter, according to the Mortgage Bankers Association (MBA).

The increase brought the total of outstanding commercial and multifamily debt to $3.46 trillion at the end of March.

"The amount of mortgage debt backed by commercial and multifamily income-producing properties continues to grow at a strong pace, with three of the four major capital sources — banks, life companies, and the GSEs and FHA — growing their holdings by more than 1 percent during the first quarter," said Jamie Woodwell, the MBA’s vice president of commercial real estate research.

"REITs (real estate investment trusts), finance companies and nonfinancial corporate businesses also showed strong appetites last quarter, with each growing their holdings of commercial/multifamily mortgages by more than $1 billion."

Commercial banks held the largest share of mortgages in the sector with $1.4 trillion, or 39% of all outstanding debt. Agency and GSE portfolios and mortgage-backed securities (MBS) held $687 billion, or 20%. Life insurance companies held $532 billion (15%), while commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDO) and other asset-backed securities (ABS) issuances held $466 billion (14%).

Commercial banks had the largest dollar increase in holdings compared to fourth-quarter 2018, seeing a $14.8 billion increase.

Multifamily mortgage debt alone rose by $17.9 billion, or 1.3%, to $1.4 trillion during the first quarter. Agency and GSE portfolios and MBS held the largest share of that debt, with $687 billion (50%). Banks and thrifts held $436 billion (32%), state and local governments held $84 billion (6%), and life insurance companies held $84 billion (6%).

The “depth and breadth of growth” among investors indicates “healthy interest” in the commercial and multifamily sector, Woodwell said.