According to a report by real estate data firm Real Capital, despite various market challenges in 2021, including persistent new waves of the COVID-19 pandemic and rapidly rising inflation, the commercial real estate lending sector in the US has made a huge difference. healthy performance. Analytics (RCA). Compared to recent years, the overall lending volume again jumped and the loan terms, despite the tightening, remained largely flexible. There were some signs of debt crisis, especially on office properties, but they have been muted so far.
This is not to say that the lending market as a whole is at solid levels as of the first quarter of 2022, RCA researchers have warned. There have been some unpleasant surprises over the past few months, including a massive wave of COVID-19 infections with the Omicron version and the start of the war in Ukraine, the first major military conflict in Europe in nearly 80 years, with the potential to debilitate the outbreak. global economic recovery. As per RCA data, some of the planned CMBS issuances have already been taken off the market due to such uncertainty. But overall the picture remains strong. Here are the key takeaways from the report:
- Overall commercial real estate Total investment sales in February stood at 38.5 billion, an increase of 34 percent over February 2020 and higher than the average volume for the same time period recorded between 2015 and 2019.
- The deals happening during the month were not closing at massive discounts-The Commercial Property Price Index (CPPI) of RCA registered a growth of 19.4 per cent during the month year after year.
- However, the most active lender groups in the US commercial real estate market suffered a setback during 2021. Overall lOwn volumes met by investor-driven groups, which include debt funds, grew 97 percent last year compared to the period between 2015 and 2019, Loan Quantity fulfilled by 52% increase in CMBS lenders and by 47 percent by regional and local banks, On the other hand, Loan volumes fulfilled by international banks fell 6 percent Compared to the years between 2015 and 2019, while national banks increased lending by only 2 percent.
- When it came to new origins, CMBS lenders were responsible for 20 percent of the market in 2021Regional banks came in second, with 19 percent of all new origins, and investor-driven groups came in third with 13 percent of the market.
- Tea The average loan size in the US commercial real estate market was $15.7 million, down from $21.2 million in 2021 in the period between 2015 and 2019. Although, Average loan-to-value (LTV) ratio dipped slightly to 66.3 percent from 67.2 percent during the above period. The decline in average LTV was largely driven by competing loans by government agencies.
- On the other hand, investor-driven groups increased their average LTV by 140 basis points., up to 72 percent. Twenty-nine percent of their loans closed in 2021 at an LTV ratio of 75 percent or more.
- At the same time, Investor-driven groups were most active in lending on new construction projects last year, accounting for 24 percent of all construction loansThe highest level recorded since RCA started tracking the data seven years ago.
- Wells Fargo becomes top promoter for both traditional and construction loans in 2021, JPMorgan coming in second place on traditional loans and Bank OZK in second place on construction loans. Godman Sachs was at number three in both categories.
- Commercial real estate lenders still haven’t seen loan defaults from the COVID-19 pandemic that would be comparable to those experienced during the great financial crisis. In 2021, American real estate reported an average loss of 19 percent on its initial loan amount. In 2010, that figure was 36 percent., Loans on office buildings took the biggest hit on values ​​in 2021.
