Outstanding commercial / multi-unit mortgages increased by $ 44.6 billion in the first quarter



What the numbers tell us

An increase of 1.1% in the first quarter of 2021 will bring total outstanding commercial / multi-family property debt to $ 3.93 trillion. Most of this debt, 50%, is in the portfolios of government-sponsored agencies and organizations (GSE) and mortgage-backed securities (MBS), followed by banks and savings banks, which own 28%, life insurance companies with 10 %, state and local government with 6%, and CMBS, CDO and other issues of ABS with 3%. Real estate investment funds (REIT), in particular, increased their holdings by $ 4.9 billion, 5.2% more than other organizations, which is a promising sign for residential REIT investors.

While certain markets are undoubtedly struggling, multi-unit rental properties and investor demand in general remain strong despite general market uncertainty. In the report on capitalization for the 3rd quarter of 2020. CBRE, multi-family and industrial properties were likely to bid above the asking price. It also found that 36% of the surveyed A-class apartment markets found a decrease in the capital rate, which indicates higher demand and the willingness of borrowers to earn less when buying today.

What does this mean for investors

The most notable takeaway from this news is the fact that REIT has seen the largest increase in multi-component commercial debt holdings, which means a steady demand for the sector and ongoing profits available for day-to-day use. investors… For example, Residential Shares (NYSE: EQR), a large REIT housing stock, acquired two new properties in 2021 for a total of $ 95.7 million and $ 115 million, respectively. new markets for the company, as well as Camden property trust (NYSE: CPT) acquired a new residential complex in Nashville, Tennessee for $ 105 million.

These new acquisitions should help companies increase their revenues by expanding while expanding their presence in new emerging markets, all of which should benefit shareholders. While expansion does not always translate into increased profits and revenues for a company, it is one way to increase shareholder value, and right now, demand and funding seems to exist to support it. It will be interesting to see how the apartment building market will be affected by moratoriums start to expire this summer, but so far the confidence in these markets is high.


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