Much is being made about the recent spat of retailers filing for bankruptcy or shutting stores. Rating agency and auditors are pressing lenders to understand their potential exposure to loans that may be negatively impacted by store closings. While that makes sense, the bigger question is, is brick and mortar retail really dead? In a recent article in Commercial Property Executive, titled “Don’t Count The Regional Mall Out” Transwestern offers a pretty compelling counterargument to the “malls are dead” assertions. Here is a link to that article.
There is no question that there is a fundamental shift occurring in retail. But it seems that every time a retailer has a bad quarter or a bad year financially, they cite on-line sales as the culprit. With on-line sales only accounting for 8 to 9 percent of all retail sales, is on-line really the problem? Perhaps some retailers are failing because they’re poorly run companies that are being out smarted by their rivals. Consumer trends are fickle and what works today may not work next year or next month for that matter. Is retail changing? Yes. Is on-line a component of that change? Yes. Will it eliminate brick and mortar stores all together? No.
The greater threat to retail in the US is the strength of the consumer. If consumer confidence falls for what ever reason and spending declines all retail will suffer including on-line. Instead of wringing our hands over on-line retailing, let’s continue to advocate for economic and tax policies that keep the consumer employed and able to spend! Then well run retailers will continue to succeed in both virtual and physical locations.
Q10 affiliates continue to finance retail having closed over 100 retail loans so far this year. Yes, deals are more difficult to place than they were six months ago but we have the breadth and depth of relationships with all of the various capital portals to get your deal done.
Congratulations to our Q10 Capital partners across the US for completing $4.3 billion in new loan origination in 2016.
“We are pleased to announce another solid year of loan production for our investor partners. Uncertainty in the capital markets certainly created challenges during the year, but we are very pleased that once again, over half our loan production was for our life insurance company correspondent lenders. Our $4 billion plus in loan production was spread among 107 different lenders”, said Bob Stout, Q10 Capital CEO
The Mortgage Bankers Association (MBA) today released an updated forecast for commercial and multifamily real estate finance volumes for 2016. MBA estimates that 2016 volumes should reach $500 billion, roughly in line with 2015’s total of $504 billion and just below the record of $508 billion originated in 2007. Commercial and multifamily debt outstanding is expected to reach $2.9 trillion in 2016 up more than 3% from the end of 2015.
At the same time, Trepp, LLC reports that CMBS delinquencies rose in May for the fourth consecutive month to 4.35%. Much of the increase is being credited to higher maturity defaults – loans that have matured but haven’t been able to find refinancing to pay off the balloon balance. In reviewing these two reports, Q10 Capital’s president and CEO, Bob Stout noted that the market discussion around CMBS indicates more maturing loans will be unable to be refinanced in the coming months so the delinquency rate could climb even higher. The delinquency rates of loans owned in portfolio by life insurance companies and originated through the GSE’s continue to be near record lows.
“Given the continued lack of clarity around the impact of risk retention rules being implemented late this year, it is possible that CMBS origination levels continue to decline. This could reduce the total origination numbers being forecast by MBA”, Stout said. Current volume forecasts for CMBS are in the $60 billion range down from the $125 billion that was being forecast at the beginning of the year. Current CMBS debt outstanding in the US was $565.9 billion as of the end of the second quarter of 2016 down from its peak of $866.8 billion in the fourth quarter of 2007 according to SIFMA a securities industry trade group.
Stay in touch with your Q10 Capital affiliated mortgage banker for the latest in market trends, active capital sources, and available terms and pricing.
Q10 Capital’s 14 partner companies finished 2015 with total loan production of $5.15 Billion. This was the groups best year since 2007 closing 698 loans with 150 different capital sources. In closing out the year, Q10 Capital Chairman Ray Driver said, “We owe a great deal of gratitude to our borrowers, capital providers and teammates for an outstanding year.” The Q10 members also grew servicing for the year to $11.9 Billion and over 3,600 loans. With the increasing level of maturing loans, 2016 promises to be another strong year.
Michael Kelly and Michael Stordahl of Q10 Realty Mortgage & Investment Company arranged $4.1 Milion financing for Yearout Mechanical’s industrial office/warehouse in Albuquerque, NM. The lender provided a 15-year fixed rate loan with a 15-year amortization. The Main Building/Warehouse was constructed in 1999 and a second warehouse was added in 2007. The property includes 72,236 SFNLA.
“The properties proximity to the Interstate, Paseo del Norte, and Jefferson St. allows for good access to the entirety of Albuquerque. The area offers a wealth of amenities and the new construction has attracted tenants from many markets around New Mexico.” ~ Michael Kelly
In early February at MBA’s CREF 2016 Convention, the MBA released several reports covering the commercial/multifamily real estate finance markets. The reports are part of MBA’s ongoing research and analysis. Among the findings:
- 2015 Q4 Commercial/Multifamily Originations Up 19%; Total 2015 Up 24%
- Volume of Commercial/Multifamily Mortgages Maturing Grows 51%
- MBA Forecasts 3% Rise in Commercial/Multifamily Mortgage Bankers Originations in 2016; Mortgage Debt Outstanding to Rise to $2.9 trillion
- MBA Releases 2015 Year-End Commercial/Multifamily Servicer Rankings
Abstracts of and links to the reports can be found below, and more information is also available in MBA’s CREF Database and on www.mba.org/crefresearch
2015 Q4 Commercial/Multifamily Originations Up 19%; Total 2015 Up 24%
There were strong volumes of borrowing and lending for commercial real estate in 2015. In particular, the fourth quarter was the fourth highest for borrowing and lending on record. Banks, life insurance companies, and Fannie Mae and Freddie Mac saw their highest tallied originations volumes. Of the major investor groups, only the CMBS market didn’t break a record for originations. In terms of overall borrowing and lending volumes, 2015 as a whole was likely second only to 2007.
View MBA’s Q4 Commercial/Multifamily Mortgage Bankers Originations Index
Volume of Commercial/Multifamily Mortgages Maturing Grows 51%
Eleven percent or $183.3 billion of $1.7 trillion of outstanding commercial and multifamily mortgages held by non-bank lenders and investors will mature in 2016, a 51 percent increase from the $121 billion that matured in 2015. Maturities will grow to $208 billion in 2017.
Learn more about MBA’s Year-end 2015 Commercial/Multifamily Loan Maturity Volumes Report
MBA Forecasts 3% Rise in Commercial/Multifamily Mortgage Bankers Originations in 2016; Mortgage Debt Outstanding to Rise to $2.9 trillion
Commercial and multifamily real estate finance markets are expected to remain strong. A growing economy, coupled with only gradual increases in interest rates, will continue to support the commercial property market, but there is a chance that cap rates could increase more rapidly in response to rising interest rates, impacting property sales and mortgage originations.
View MBA’s Fifth Annual Commercial/Multifamily Real Estate Finance Forecast (members only access)
MBA Releases 2015 Year-End Commercial/Multifamily Servicer Rankings
MBA’s Servicer Rankings includes breakouts for primary, master and special servicing. It also ranks firms by their total volumes, as well as their servicing for specific investor groups, including CMBS, life insurance company, Fannie Mae and Freddie Mac, FHA and other groups.
View MBA’s Year-End 2015 Commercial/Multifamily Servicer Rankings
Colin Elder and Doug Clyde of Symetra cover investment trends and market interest.
Jon Hart and Dale Helling of CorAmerica review market conditions with Q10 KDH producers.
Blazer McClure and Nick Worth of RGA share ideas on lending with Q10 KDH producers.
Q10 KDH Travis Fite and Cris Brown of Ameritas pictured at MBACREF16.
Ryan Watson and Ray Driver meet with Mark Mentzer of Aegon.
Tracy Knapp (top left) and Steve Mack (bottom right) of Kansas City Life join Ryan Watson, Gary Hough and Matt Franke in a discussion about lending opportunities in the Texas markets.
Gary Hough meets with Denny Fisher (standing) and Lain Porter (seated) of American National Insurance Company.
Denny Fisher, Lain Porter, and Tom Higgins, all of American National Insurance Company (ANICO).
Joe Laderer of Guggenheim and Matt Franke discuss lending opportunities.
Kristy Hunt, Leah Caputo, and Christine Dierker of State Farm discuss 2016 goals and opportunities with Gary Hough over lunch.
Ray Driver, Q10 KDH Principal, opens Q10 meeting at MBACREF16.
Lender panel interactive discussion on what lenders wish mortgage bankers knew. Pictured: Jim Wickenhauser of Q10 Triad, Topher VanMourick of Q10 Westcap, John Maher of Sun Life, Ken Borst of StanCorp, Alex Yates of Q10 Pinnacle Financial, Trey Warren of Q10 Professional Mortgage and Fred Welker of Lincoln Financial.
David Cardwell, Director of Production for Freddie Mac Small Balance Lending, gives an update to Q10 Capital producers on the benefits of originating multifamily loans with Freddie Mac.
Bob Stout, Q10 President, welcomes Q10 member offices at MBACREF16.
Ryan Watson of Q10KDH and David Cardwell, Director, Production Small Balance Lending with Freddie Mac.
Ryan states, “David gave the Q10 offices an overview of the growth that the Freddie Mac Small Balance Lending Program has had over the past year and the advantages that the program has for our borrowers.”