Banks are on top. Approximately 42 percent of total commercial lending nationally in the first quarter of 2014 was originated by banks, according to CBRE’s Capital Markets U.S. Lender Forum June 2014 report. Their market share was up from around 26 percent for the whole of 2013, the report showed. Life companies dominated in the first quarter of last year.
Banks have benefited from increased bridge lending, a sector that was up 85 percent from the same period last year and totaled 11 percent of total loans closed in the first quarter of this year, according to the report.
“The growth in bridge lending helped to solidify banks’ reemergence as key players in the commercial lending landscape,” the report stated. “Banks have been well positioned to take advantage of these requests, as they have traditionally preferred shorter terms and floating-rate structures.”
On the other hand, CMBS originations showed a marked decrease in volume to roughly 11 percent, or half their market share in the same period in 2013.
This was largely due to banks’ resurgence, creating more competition, the report said.
Originations from life companies accounted for approximately 29 percent of the overall volume, just slightly decreased from numbers in the same period of last year.
“Life companies continued to be the dominant lenders for long-term, fixed-rate financing with lower leverage,” the reported stated. “They have also been effective in providing niche products such as early rate locks and construction-to-permanent loan financing.”
Finance company, pension fund, REIT and “other lender” originations increased from approximately 11 percent of total business during last year’s first quarter to 17 percent in the same quarter of 2014, with bridge loans and permanent financing as their bread and butter.
“With debt readily available from a variety of sources, the commercial real estate finance market is experiencing high levels of liquidity and stronger transaction volumes,” said Brian Stoffers, chief operating officer at CBRE Capital Markets and president of debt and equity finance, in a prepared statement. “Acquisitions accounted for more than half the volume of permanent financing loans during Q1 2014, up substantially from Q4 2013. We strongly believe this moment in time offers a compelling window of opportunity for borrowers to lock in favorable financing terms.”
Commercial average LTVs for permanent, fixed- rate loans decreased modestly to 62.8 percent in the first quarter of the year from 64.1 percent the last quarter of 2013, according to the report. Lower- leverage, permanent loans from life companies were largely responsible for this shift.