Commercial Real Estate Debt Still Expanding

The CMBS market may be frozen, but the level of outstanding commercial real estate debt continued to expand during the second quarter.

Commercial and multifamily mortgage debt outstanding rose 1.5% in the second quarter, to $3.44 trillion, the Mortgage Bankers Association reports, based on an analysis of the Federal Reserve Board Flow of Funds data.

Amid the current credit crunch turmoil, commercial and multifamily mortgage debt outstanding gained $51.3 billion from the first quarter of 2008. Multifamily mortgage debt outstanding alone grew to $875 billion, an increase of $16.3 billion or 1.9% from first quarter levels.

"Despite the persistent credit crunch, investors increased their holdings of commercial/multifamily mortgages in the second quarter," says Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "The only major investor group to see a decline in their holdings was the commercial mortgage-backed securities (CMBS) market, which has been most profoundly affected by the credit crunch. Other investor groups including commercial banks, life insurance companies, thrifts and the government-sponsored enterprises (GSEs) increased their holdings over the quarter."

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