November 6, 2018
Demand for commercial real estate debt remains strong, supported by an increase in sales transactions in Q3 2018, according to the latest research from CBRE. The CBRE Lending Momentum Index, which tracks the pace of commercial loan closings in the U.S, ended Q3 2018 on a strong note at a value of 252, up nearly 25% from 202 in June. Compared with a year ago, the index is up by 13.1%.
Banks, alternative lenders and agencies all contributed to the increase in commercial lending volume.
CBRE’s Brian Stoffers says, “Despite the trend of higher interest rates and lower loan refinancings, commercial real estate debt remains sought after by borrowers and was boosted this quarter by the market increase in sales transactions.”
Banks remained active in Q3 2018, accounting for close to 40% of non-agency lending volume. This was up from a 28% share in Q3 2017.
Alternative lenders, including REITS, finance companies and debt funds, accounted for 27% of loan closings in Q3 2018, up from 16.4% in Q2 2018 and 13.1% from a year ago.
Life companies dipped to 18.6% of the non-agency lending market in Q3 2018, down from 20.7% in Q2 2018 and 22.9% from a year ago.
CMBS issuance slowed by mid-year. As of mid-October, year-to-date issuance totaled $63 billion, down from $68.2 billion for the same period in 2017. At 14.6%, the Q3 2018 share of CMBS conduit originators was on par with Q2 2018, but down from 36% a year ago.
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