MBA COMMERCIAL REAL ESTATE / MULTIFAMILY FINANCE

mortgage debt outstanding

Q3 2011
Beginning with the Q4 2010 release, MBAs analysis of mortgage debt outstanding more accurately reflects the true level of mortgages backed by income-producing commercial and multifamily properties. Previous releases do not incorporate these improvements.
11064

 december 2011 by the mortgage bankers association (mba). all rights reserved except as explicity granted. 1717 Rhode Island Avenue, NW, Suite 400 Washington, DC 20036 (202) 557-2700 this data is provided by mba solely for use as a reference. no part of the survey data may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without mbas prior written consent. Disclaimer although the mba takes great care in producing this and all related data products, the mba does not guarantee that the information is accurate, current or suitable for any particular purpose. the referenced data are provided on an as is basis, with no warranties of any kind whatsoever, either express or implied, including, but not limited to, any warranties of title or accuracy or any implied warranties of merchantability or fitness for a particular purpose. use of the data is at the users sole risk. in no event will mba be liable for any damages whatsoever arising out of or related to the data, including, but not limited to direct, indirect, incidental, special, consequential or punitive damages, whether under a contract, tort or any other theory of liability, even if mba is aware of the possibility of such damages.

11064

MBA COMMERCIAL REAL ESTATE / MULTIFAMILY FINANCE

mortgage debt outstanding

Q3 2011

Commercial/Multifamily Mortgage Debt Outstanding

Third Quarter 2011
The level of commercial/multifamily mortgage debt outstanding was essentially unchanged in the third quarter of 2011, as three of the four major investor groups increased their holdings, according to the Mortgage Bankers Association (MBA). The $2.4 trillion in commercial/multifamily mortgage debt outstanding was just $533 million lower than the second quarter 2011 figure. Multifamily mortgage debt outstanding rose to $806 billion, an increase of $4.1 billion or 0.5 percent from the second quarter. Three of the four leading investor groups increased their holdings of commercial and multifamily mortgages during the third quarter, said Jamie Woodwell, MBAs Vice President of Commercial Real Estate Research. Life insurance companies, banks, and Fannie Mae/Freddie Mac/FHA each increased their investments in commercial/multifamily mortgages during the period. The CMBS market, which was sidelined during the quarter by US and European sovereign debt struggles and other capital markets disruptions, saw $7.4 billion more in loans pay-off and pay-down

Commercial Multifamily Mortgage Debt Outstanding By Investor Group, Third Quarter 2011

than was added. The net effect was no appreciable change in the amount of commercial/multifamily mortgage debt outstanding. The analysis summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under Life Insurance Companies) and in commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset backed securities (ABS) for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues). MBA recently improved its reporting of commercial and multifamily mortgage debt outstanding. The new reporting excludes two categories of loans that had formerly been included loans for acquisition, development and construction and loans collateralized by owner-occupied commercial properties. By excluding these loan types, the analysis here more accurately reflects the balance of loans supported by office buildings, retail centers, apartment buildings and other incomeproducing properties that rely on rents and leases to make their payments. Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $793 billion, or 33 percent of the total. CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $607 billion, or 26 percent of the total. Agency and GSE portfolios and MBS hold $338 billion, or 14 percent of the total, and life insurance companies hold $310 billion, or 13 percent of the total. Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the CMBS, CDO and other ABS categories.

MULTIFAMILY MORTGAGE DEBT OUTSTANDING Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share, with $338 billion or 42 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $217 billion, or 27 percent of the total. CMBS, CDO and other ABS issues hold $94 billion, or 12 percent of the total; state and local governments hold $71 billion, or 9 percent of the total; life insurance companies hold $49 billion, or 6 percent of the total; and the federal government holds $14 billion, or 2 percent of the total. CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING In the third quarter of 2011, agency and GSE portfolios and MBS saw the largest increase in dollar terms in their holdings of commercial/multifamily mortgage debt an increase of $5.8 billion or 1.7 percent. Life insurance companies increased their holdings of commercial/multifamily mortgages by $5.7 billion or 1.9 percent. CMBS, CDO and other ABS issues saw the largest decrease of $7.4 billion or 1.2 percent. In percentage terms, other insurance companies saw the largest increase in their holdings of commercial/multifamily mortgages, an increase of 5.6 percent. The household sector saw their holdings decrease 7.7 percent. CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING The $4.1 billion increase in multifamily mortgage debt outstanding between the second quarter and third quarter of 2011 represents a 0.5 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $5.8 billion, or 1.7 percent. Commercial banks increased their holdings of multifamily mortgage debt by $1.0 billion, or 0.5 percent. Life insurance companies increased by $899 million, or 1.9 percent. CMBS, CDO, and other ABS issues saw the

biggest decrease in their holdings of multifamily mortgage debt, by $2.2 billion or 2.3 percent. In percentage terms, life insurance companies recorded the largest increase in holdings of multifamily mortgages, at 1.9 percent. Finance companies saw the biggest decrease, at 5.2 percent. MBAs analysis is based on data from the Federal Reserve Boards Flow of Funds Account of the United States and the Federal Deposit Insurance Corporations Quarterly Banking Profile. More information on the construction of this data series is contained in Appendix A in the report.

COMMERCIAL AND MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Commercial and Multifamily Mortgage Debt Outstanding, by Quarter ($millions)

3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0

2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3

MF

Commercial

Source: MBA, Federal Reserve Board of Governors, and FDIC

QUARTERLY COMMERCIAL AND MULTIFAMILY MORTGAGE DEBT OUTSTANDING Commercial and Multifamily Mortgage Debt Outstanding, by Sector

Mortgage Debt Outstanding 2011 Q3 ($millions) Bank and Thrift CMBS, CDO and other ABS issues Agency and GSE portfolios and MBS Life insurance companies State and local government Federal government Finance companies REITs Nonfarm noncorporate business Household sector Private pension funds Nonfinancial corporate business State and local government retirement funds Other insurance companies TOTAL 793,004 606,501 337,500 309,553 85,837 80,343 56,547 34,067 22,388 13,650 12,307 8,956 5,964 4,591 2,371,208 % of total 33.4% 25.6% 14.2% 13.1% 3.6% 3.4% 2.4% 1.4% 0.9% 0.6% 0.5% 0.4% 0.3% 0.2% 2011 Q2 ($millions) 791,614 613,917 331,746 303,871 86,989 80,085 58,085 36,252 22,323 14,787 12,460 9,366 5,900 4,346 2,371,741 % of total 33.4% 25.9% 14.0% 12.8% 3.7% 3.4% 2.4% 1.5% 0.9% 0.6% 0.5% 0.4% 0.2% 0.2% Change ($millions) 1,390 -7,416 5,754 5,682 -1,152 258 -1,538 -2,185 65 -1,137 -153 -410 64 245 -533 Percent 0.2% -1.2% 1.7% 1.9% -1.3% 0.3% -2.6% -6.0% 0.3% -7.7% -1.2% -4.4% 1.1% 5.6% 0.0%

Source: Flow of Funds Accounts, Federal Reserve Board of Governors Note: Beginning with the Q4 2010 release, MBA's analysis of mortgage debt outstanding more accurately reflects the true level of mortgages backed by income-producing commercial and multifamily properties. Previous releases do not incorporate these improvements.

COMMERCIAL AND MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Commercial and Multifamily Mortgage Debt Outstanding, by Sector ($millions)

B ank and Thrift CM B S, CDO and o ther A B S issues A gency and GSE po rtfo lio s and M B S Life insurance co mpanies State and lo cal go vernment Federal go vernment Finance co mpanies REITs No nfarm no nco rpo rate business Ho useho ld secto r P rivate pensio n funds No nfinancial co rpo rate business State and lo cal go vernment retirement funds Other insurance co mpanies 0 85,837 80,343 56,547 34,067 22,388 1 3,650 1 2,307 8,956 5,964 4,591 1 00,000 200,000 300,000 400,000 201 Q2 1 500,000 201 Q3 1 600,000 700,000 337,500 309,553 606,501

793,004

800,000

900,000

Source: MBA, Federal Reserve Board of Governors, and FDIC

COMMERCIAL AND MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Commercial and Multifamily Mortgage Debt Outstanding, by Selected Sector by Quarter ($millions) 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0
1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1

Agency and GSE portfolios and MBS CMBS, CDO and other ABS issues
Source: MBA, Federal Reserve Board of Governors, and FDIC

Bank and Thrift Life insurance companies

COMMERCIAL AND MULTIFAMILY MORTGAGE FLOWS Net Change in Commercial and Multifamily Mortgage Debt Outstanding, by Quarter ($millions)

100,000

80,000

60,000

40,000

20,000

(20,000)

(40,000) 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3

MF

Commercial

TOTAL

Source: MBA, Federal Reserve Board of Governors, and FDIC

COMMERCIAL AND MULTIFAMILY MORTGAGE FLOWS Net Change in Commercial and Multifamily Mortgage Debt Outstanding, by Sector ($millions)

A gency and GSE po rtfo lio s and M B S Life insurance co mpanies B ank and Thrift Federal go vernment Other insurance co mpanies No nfarm no nco rpo rate business State and lo cal go vernment retirement funds P rivate pensio n funds No nfinancial co rpo rate business Ho useho ld secto r State and lo cal go vernment Finance co mpanies REITs CM B S, CDO and o ther A B S issues (7,41 6) (6,000) (4,000) (2,000) 0 2,000 4,000 (1 53) (41 0) (1 37) ,1 (1 52) ,1 (1 ,538) (2,1 85) 258 245 65 64 1 ,391

5,754 5,682

(1 2,000) (1 0,000) (8,000)

6,000

8,000

2011Q2
Source: MBA, Federal Reserve Board of Governors, and FDIC

2011Q3

MULTIFAMILY MORTGAGE DEBT OUTSTANDING

MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Multifamily Mortgage Debt Outstanding, by Quarter ($millions)

900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3

Source: MBA, Federal Reserve Board of Governors, and FDIC

QUARTERLY MULTIFAMILY MORTGAGE DEBT OUTSTANDING Multifamily Mortgage Debt Outstanding, by Sector

Mortgage Debt Outstanding 2011 Q3 ($millions) Agency and GSE portfolios and MBS Bank and Thrift CMBS, CDO and other ABS issues State and local government Life insurance companies Federal government Nonfarm noncorporate business Finance companies Private pension funds State and local government retirement funds REITs Nonfinancial corporate business TOTAL 337,500 216,802 94,110 71,181 48,986 14,089 12,384 3,440 2,801 2,795 1,716 345 806,149 % of total 41.9% 26.9% 11.7% 8.8% 6.1% 1.7% 1.5% 0.4% 0.3% 0.3% 0.2% 0.0% 2011 Q2 ($millions) 331,746 215,802 96,286 72,141 48,087 14,116 12,348 3,630 2,930 2,765 1,790 360 802,001 % of total 41.4% 26.9% 12.0% 9.0% 6.0% 1.8% 1.5% 0.5% 0.4% 0.3% 0.2% 0.0% Change ($millions) 5,754 1,000 -2,176 -960 899 -27 36 -190 -129 30 -74 -15 4,148 Percent 1.7% 0.5% -2.3% -1.3% 1.9% -0.2% 0.3% -5.2% -4.4% 1.1% -4.1% -4.2% 0.5% Sector Share of $ Change 138.7% 24.1% -52.5% -23.1% 21.7% -0.7% 0.9% -4.6% -3.1% 0.7% -1.8% -0.4%

Source: MBA, Federal Reserve Board of Governors, and FDIC Note: Beginning with the Q4 2010 release, MBA's analysis of mortgage debt outstanding more accurately reflects the true level of mortgages backed by income-producing commercial and multifamily properties. Previous releases do not incorporate these improvements.

MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Multifamily Mortgage Debt Outstanding, by Sector ($millions)

A gency and GSE po rtfo lio s and M B S B ank and Thrift CM B S, CDO and o ther A B S issues State and lo cal go vernment Life insurance co mpanies Federal go vernment No nfarm no nco rpo rate business Finance co mpanies P rivate pensio n funds State and lo cal go vernment retirement funds REITs No nfinancial co rpo rate business 0 1 4,089 1 2,384 3,440 2,801 2,795 1 6 ,71 345 50,000 1 00,000 1 50,000 200,000 201 Q2 1 250,000 300,000 94,1 0 1 71 81 ,1 48,986 21 6,802

337,500

350,000

400,000

201 Q3 1

Source: MBA, Federal Reserve Board of Governors, and FDIC

MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Multifamily Mortgage Debt Outstanding, by Selected Sector by Quarter ($millions)

400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 1980Q1 1981Q1 1982Q1 1983Q1 1984Q1 1985Q1 1986Q1 1987Q1 1988Q1 1989Q1 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1

Agency and GSE portfolios and MBS CMBS, CDO and other ABS issues State and local government
Source: MBA, Federal Reserve Board of Governors, and FDIC

Bank and Thrift Life insurance companies

MULTIFAMILY MORTGAGE FLOWS Net Change in Multifamily Mortgage Debt Outstanding, by Quarter ($millions)

40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 (5,000) 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3

Source: MBA. Federal Reserve Board of Governors, and FDIC

MULTIFAMILY MORTGAGE FLOWS Net Change in Multifamily Mortgage Debt Outstanding, by Sector ($millions)

A gency and GSE po rtfo lio s and M B S B ank and Thrift Life insurance co mpanies No nfarm no nco rpo rate business State and lo cal go vernment retirement funds No nfinancial co rpo rate business Federal go vernment REITs P rivate pensio n funds Finance co mpanies State and lo cal go vernment CM B S, CDO and o ther A B S issues -2,1 76 (2,000) (1 ,000) 0 1 ,000 2,000 3,000 4,000 5,000 -960 -27 -74 -1 29 -1 90 36 30 -1 5 1 ,000 899

5,754

(3,000)

6,000

7,000

201 Q2 1

201 Q3 1

Source: MBA, Federal Reserve Board of Governors, and FDIC

APPENDIX A MBAs analysis is Federal Reserve Account of the Federal Deposit Quarterly Banking based on data from the Boards Flow of Funds United States and the Insurance Corporations Profile

Estimated Components of Federal Reserves Flow of Funds Commercial and Multifamily Mortgages Held by Banks and Thrifts ($Billions)
Multifamily mortgages, $216.8

MBAs analysis of commercial and multifamily mortgage debt outstanding was changed in the fourth quarter of 2010 to exclude two categories of loans that had previously been included; a. loans for acquisition, development and construction and b. loans collateralized by owneroccupied commercial properties. By excluding these loan types, MBAs analysis more accurately reflects the balance of loans supported by office buildings, retail centers, apartment buildings and other income-producing properties that rely on rents and leases to make their payments. For the third quarter 2011, the Federal Reserve Boards Flow of Funds Accounts data attributed $1.5 trillion of outstanding commercial and multifamily mortgages to banks and thrifts. Comparing this number to the FDICs Quarterly Banking Profile for the same period, one sees that banks and thrifts held $216.8 billion of multifamily mortgages and $1,055.5 billion of non-farm nonresidential mortgages, of which 51 percent or $576 billion were incomeproducing. The combined $793 billion of mortgages backed by multifamily and other income-producing properties is included in this analysis. The $1.5 trillion total reported by the Federal Reserve also includes $479 billion of loans collateralized by owneroccupied commercial properties and another $239 billion of loans backed by acquisition, development and construction projects (including those for single-family development), which are excluded in from this analysis.

Construction loans, $239.3

Incomeproducing commercial mortgages, $576.0 Owneroccupied commercial mortgages, $479.0

Source: MBA, Federal Reserve Board of Governors, and FDIC

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