‘CBRE Lending Momentum Index’ Up 20.8% YOY Life Companies Post Strong Quarter; Banks Continue to Lead Major Lender Categories

Commercial real estate lending activity gained traction in the second quarter of 2019 following a brief pause at the start of the year amid financial market volatility, according to the latest research from CBRE.

The CBRE Lending Momentum Index, which tracks the pace of commercial loan closings in the U.S, reached a value of 244 in June—up 2.3% from March’s close. Compared with a year ago, lending growth is 20.8% above its June 2018 close.

CBRE’s lender survey indicated that life company lenders had another strong quarter in Q2 2019, accounting for 26% of non-agency commercial mortgage closings—up from 21% a year ago. Banks continued to lead the four major lender categories, accounting for 35% of loan closings.

“Our survey of life company lenders indicates that all are actively quoting deals and most have robust pipelines. These lenders are quoting both fixed- and floating-rate deals, with LTVs up to 65%. Many life companies are also providing higher LTVs on select deals through higher-yielding structured loan products,” said Brian Stoffers, Global President of Debt & Structured Finance for CBRE Capital Markets.

Banks accounted for close to 36% of volume in Q2 2019, down slightly from 39% in Q1 2019 and virtually even with a year ago. Banks remain active in quoting shorter-term floating- and fixed-rate deals, with some banks have been actively quoting seven- to 10-year deals.

Alternative lenders, including REITs, finance companies and debt funds, had a 26% market share in Q2 2019—lower than a year ago but up 12 percentage points from Q1 2019. CBRE tracks some 200 debt funds that are actively placing capital in the bridge, mezzanine and construction lending segments.

After a strong Q1 2019, CMBS conduit market share dipped to 13% in Q2 2019. Many market participants expect CMBS volume will stabilize in the second half of 2019, as spreads likely will remain stable or tighten slightly.

Underwriting on loans tracked by CBRE were slightly more conservative in Q2 2019, with increases in underwritten cap rates and debt yields. The percentage of loans carrying either partial or full interest-only terms fell below the 60% mark for the first time in nearly two years.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.