Mba Q1 2011 Commercial/multifamily Quarterly Databook

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MBA COMMERCIAL REAL ESTATE / MULTIFAMILY FINANCE QUARTERLY DATABOOK Q1 2011 10628 © June 2011 Mortgage Bankers Association. All rights reserved. Copying or other redistribution of this publication — in whole or in part — violates U.S. copyright law as well as any applicable MBA terms of use. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the copyright owner. Disclaimer Although the MBA takes great care in producing this and all related data products, MBA does not guarantee that the information is accurate, current or suitable for any particular purpose. The referenced data are provided on an “as is” basis, with no warranties of any kind whatsoever, either express or implied, including, but not limited to, any warranties of title or accuracy or any implied warranties of merchantability or fitness for a particular purpose. Use of the data is at the user’s sole risk. In no event will MBA be liable for any damages whatsoever arising out of or related to the data, including, but not limited to direct, indirect, incidental, special, consequential or punitive damages, whether under a contract, tort or any other theory of liability, even if MBA is aware of the possibility of such damages. 10628 MBA COMMERCIAL REAL ESTATE / MULTIFAMILY FINANCE QUARTERLY DATABOOK Q1 2011 First Quarter 2011 Selected Charts Month-over-month Change in At-Place Employment Thousands of jobs Treasury Yield Curve Percent Source: Bureau of Labor Statistics Source: Federal Reserve Board Ten-year Treasury and 10-year Swaps Percent Multifamily Permits, Starts and Completions Thousands, Seasonally adjusted annual rate Source: Federal Reserve Board Source: Census Bureau Commercial/Multifamily Mortgage Bankers Originations Index 2001 quarterly average = 100 Source: MBA The Commercial Real Estate/ Multifamily Finance Quarterly Data Book is a quarterly compendium of the latest MBA research on the commercial/multifamily finance markets. The latest version of the Data Book can be downloaded from the MBA website at: http://www. mortgagebankers.org/Res earchandForecasts/ Commercial/Multifamily Property Sales $Billions Price Indices December 2000 = 100 Source: Real Capital Analytics Source: MBA, Moody’s Investors Services and MIT Commercial/Multifamily Delinquency Rates Average Vacancy Rates By Property Type Source: Federal Deposit Insurance Corporation Source: REIS MBA Commercial Real Estate/ Multifamily Finance Quarterly Data Book First Quarter 2011 June 30, 2011 SELECTED CHARTS ................................................................................................ 5 TABLE OF CONTENTS ............................................................................................. 7 1. OUTLOOK Introduction ....................................................................................................... 9 Economic Commentary .......................................................................................12 MBA Long-Term Mortgage Finance and Economic Forecasts ......................................15 Treasury Yields and Bank Rates ...........................................................................17 Employees on Non-farm Payrolls ..........................................................................19 Owner- and Renter-Occupied Housing Units ...........................................................21 2. COMMERCIAL/MULTIFAMILY FINANCE ENVIRONMENT Extract of Commercial Real Estate Comments from The Federal Reserve Board’s Beige Book...........................................................23 New Inventory Change Less Net Absorption for Commercial/Multifamily Properties ...................................................................26 Average Rents and Vacancy Rates at Commercial/Multifamily Properties ....................28 Commercial/Multifamily Property Sales Volume ......................................................30 Commercial/Multifamily Prices and Capitalization Rates ...........................................32 Commercial/Multifamily Property Price Indices .......................................................34 CoreLogic Profile of Commercial/Multifamily Properties By CBSA & Sales ....................36 Multifamily Building Permits, Starts and Completions...............................................38 3. PRODUCTION Quarterly Mortgage Banker Originations Survey .....................................................41 Commercial Mortgage Backed Securities (CMBS) and Commercial Real Estate Collateralized Debt Obligation (CRE CDO) Issuance............................45 American Council of Life Insurers (ACLI) Commitment Volumes ................................47 4. COMMERCIAL MORTGAGE DEBT & REAL ESTATE SECURITIES OUTSTANDING Commercial/Multifamily Mortgage Debt Outstanding ...............................................49 Commercial/Multifamily Mortgage Delinquencies by Investor Group ...........................66 Commercial Mortgage-Backed Securities (CMBS) Outstanding ..................................72 Commercial Mortgage Backed Securities (CMBS) Spreads ........................................75 5. SERVICING Commercial/Multifamily Mortgage Servicers, Year-End 2010.....................................77 6. RECENT MBA COMMERCIAL/MULTIFAMILY RESEARCH RELEASES ....................94 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 1. Outlook Commercial Real Estate Markets Show the Natural Effects of the Turn of the Real Estate Cycle First quarter data on the commercial real estate markets show the natural effects of the turn of the real estate cycle. Broader economic indicators were grudgingly positive in the first quarter, but provided less of a tail wind to commercial real estate markets than they might have. Despite this softness, real estate fundamentals have stabilized and are beginning to show signs of mending. Transaction volumes are picking up, and pricing and loan performance are showing initial signs – inconsistent though they are – of improvement. Any pick-up in economic growth will speed the healing; any slowdown will draw out the cycle. THE ECONOMY The U.S. economy grew at a revised seasonally adjusted annual rate of 1.9 percent in the first quarter – the seventh straight quarter of positive growth but at a rate lower than what most economists see as necessary to keep the economy fully engaged. Investment in real estate structures, both residential and nonresidential, continued to be a drag on GDP growth. This and an overall decline in government spending and investment were the major factors behind the slower growth. Personal consumption, business spending and changes in inventories were all net positive contributors to growth during the quarter. Employment growth picked up in the first quarter and into the second before logging a disappointing report for May. On a seasonally-adjusted basis, monthly job growth was reported as 68,000 jobs in January, 235,000 jobs in February, 194,000 jobs in March and 232,000 jobs in April before falling to 54,000 jobs in May. The 9.1 percent unemployment rate, down from its 10.1 percent peak in October 2009, remains elevated. The homeownership rate continued to decline during the first quarter – falling to a seasonally adjusted rate of 66.5 percent, the first time the rate has been below 2/3 since 1998. Coupled with a drop in the total number of occupied housing units, the homeownership rate decline drove the number of owner-occupied housing units down by more than 300,000 households during the quarter, while the number of renter-occupied units remained essentially flat. Since the end of 2006, demand for owner-occupied housing has declined by 1.5 million and demand for renter-occupied housing has increased by more than 3 million households. Interest rates remain extremely low on a historical basis. Short-term rates could scarcely get lower – with the 3-month Treasury at 0.04 percent in May and the 1year Treasury at 0.19 percent – the lowest recorded since the series was started in 1953. The ten-year Treasury averaged 3.17 percent in May. COMMERCIAL REAL ESTATE FUNDAMENTALS Demand for space in commercial real estate properties, fostered by overall economic growth, is outpacing the low level of new space coming online, and is beginning to eat into commercial real estate vacancies. Average vacancy rates declined for apartment and office properties in the first quarter and were flat for retail properties. The drop in average apartment vacancy rates – driven by the continued drop in the homeownership rate – was the most pronounced, falling from 8.0 in the first quarter of 2010 and 6.6 percent in the fourth quarter of 2010 to 6.2 percent in the first quarter of 2011. Office vacancy rates fell from 17.6 percent in the fourth quarter to 17.5 percent in the first, but are up from OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 9 Commercial Real Estate/Multifamily Finance Quarterly Data Book last year’s Q1 rate of 17.3 percent. Retail vacancy rates were flat at 10.9 percent in the first quarter, where they have been for the past year. Average asking rents for apartments rose two percent from last year’s first quarter while rents for office and retail space were unchanged. The strength of the apartment market has brought a bounce to multifamily construction starts and permitting. Multifamily starts rose, at a seasonally adjusted annual rate, to 134,000 units in May. The May level remains well below long-term averages but marked the fifth straight month above 100,000 units. Permitting has also shown the turn of the real estate cycle, with multifamily permitting in May (at a seasonally adjusted annual rate) rising to 190,000 units authorized – the highest monthly figure since October 2008, but also still well below long-term norms. PROPERTY SALES AND PRICING Property sales volumes followed the usual seasonal pattern – declining between the fourth quarter and first quarter – but were 70 percent higher than the level sold in the first quarter of 2010. A total of $24.6 billion of apartments, industrial, office and retail properties and portfolios of $5 million or more sold during the first quarter. Sales of apartment, industrial and office properties all more than doubled on a dollar basis from last year’s first quarter. Sales of retail properties rose 60 percent. Data on commercial real estate prices remain a riddle. After rising in the fourth quarter of 2010, both the Moody’s/REAL CPPI and NCREIF TBI fell during the first quarter, the Moody’s index by 8.5 percent and the NCREIF by 0.7 percent. The Moody’s index ended the quarter at just 53 percent of its peak value, the NCREIF index at 72 percent of its peak. Differences in the parts of the market each index covers explain some of the differences between the trends, but small transaction volumes, composition issues and other factors add a Q1 2011 cloud of uncertainty to interpreting the numbers. Reported cap rates, meanwhile, are down significantly. On a year-over-year basis, first quarter cap rates fell for all major property groups. Average cap rates for apartment properties fell from 6.9 percent in Q1 2010 to 6.7 percent in Q1 2011. Cap rates fell from 8.7 percent to 7.7 percent for industrial properties, 8.2 percent to 7.3 percent for office properties, and 8.2 percent to 7.6 percent for retail properties. MORTGAGE ORIGINATIONS AND DEBT OUTSTANDING Like property sales volumes, commercial and multifamily mortgage originations followed the usual seasonal pattern of declining between the fourth quarter and first quarter. First quarter 2011 originations were 25 percent lower than during the fourth quarter of 2010 and 89 percent higher than during the same period last year. Every major investor group saw an increase in activity compared to last year’s first quarter. Life companies made $7.8 billion of mortgage commitments during the first quarter, the highest first quarter level since 2008 and 60 percent more than during last year’s first quarter. CMBS securitizers issued $11.6 billion of new bonds, the highest first quarter level since 2007. No new CMBS were issued during the first quarters of either 2009 or 2010. The volume of new lending during the first quarter roughly equaled the volume of loans paying off and paying down, leading to little change in the amount of commercial/multifamily mortgage debt outstanding. The $2.377 trillion of mortgage debt outstanding at the end of the first quarter was $3 billion, or 0.1 percent, lower than the level at the end of Of the top seven the fourth quarter. investor groups, five – CMBS, CDO and other ABS issues; Agency and GSE portfolios and MBS; life insurance companies; state and local governments; and the federal government – increased their holdings of commercial and multifamily mortgages over the quarter. Banks and OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 10 Commercial Real Estate/Multifamily Finance Quarterly Data Book thrifts and finance companies each reduced their balances. The balance of multifamily mortgage debt outstanding increased by $3 billion or 0.4 percent over the quarter, driven by continued increases in the balances held and insured by Agency and GSE portfolios and MBS (predominantly Fannie Mae, Freddie Mac and FHA). MORTGAGE PERFORMANCE The turn of the real estate cycle is showing itself in commercial and multifamily delinquency rates as well. Delinquency rate experiences continued to be mixed among different investor groups during quarter. The delinquency rate for loans held in CMBS reached the highest level since the series began in 1997, but the climb was slower than in recent quarters. Delinquency rates for other groups remain below levels seen in the last major real estate downturn during the early 1990’s, some by large margins. Between the fourth quarter of 2010 and first quarter of 2011, the 90+ day delinquency rate on loans held by FDIC-insured banks and thrifts remained the same at 4.18 percent, 2.40 percentage points lower than the series high (6.58 percent reached in the second quarter of 1991) . The 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) increased 0.23 percentage points to 9.18 percent, a record high for the series. The 60+ day delinquency rate on loans held in life company portfolios decreased 0.05 percentage points to 0.14 percent, 7.23 percentage points lower than the series high (7.37 percent reached during the fourth quarter of 1993). The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae decreased 0.07 percentage points to 0.64 percent, 2.98 percentage points below the series high (3.62 percent, reached during the fourth quarter of 1991). The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac increased 0.10 percentage points to 0.36 percent, 6.45 percentage points lower than the series high (6.81 percent reached in 1992). Q1 2011 CONCLUSION For most property types, vacancy rates remain elevated, transaction volumes remain muted and property prices remain below their peaks, but the natural ebb and flow of the real estate cycle is beginning to have an effect. Economic growth, coupled with the natural cycle response of a constriction in new supply in the wake of a real estate downturn, is helping to stabilize and mend the commercial real estate markets. The pace and shape of continued recovery will be driven by the rate of economic growth and by how investors and developers react to the market changes they see and foresee. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 11 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 Economic Commentary Waiting, waiting… June 15, 2011 The US economic recovery has been unusually dependent upon steady growth in the rest of the world to fuel demand for US exports. With continued turmoil in the Mideast, a renewed debt crisis in Europe, Japan recovering from the tsunami, and fears of a bubble in the Chinese economy, world economic growth has slowed. These global disruptions have added to the pervasive sense in the US that the domestic economy is still treading water, with businesses and households reluctant buyers across the board. Job growth has been disappointing in recent months, but job growth is better than the alternative. Manufacturing activity, which in prior months was one of the strongest sectors of the economy, seems to have stalled. With the disappointing economic data, interest rates have continued to slide over the past month, dipping below the 3 percent mark in recent weeks. To cap off this unhappy report, inflation has picked up in recent months, and price pressures seem to be spreading beyond prices for gas and food. However, bond markets seem to have taken little notice of this uptick so far. Markets also seem surprisingly unfazed by the pending deadline regarding the federal debt limit. For mortgage originators, this has meant a pleasant surprise in the form of a significant increase in refinance volume as mortgage rates have dropped 8 of the last 9 weeks. Our forecast projects a pickup in economic growth and job growth in the second half of the year and that interest rates will trend upwards this year and next, as the Fed exits the market. Our expectation is that the Fed will not increase their short-term rate target until early in 2012. However, the risk that the economy will continue to grow at a below trend pace has increased. If that happens, rates could stay lower for a longer time, but it would also coincide with slower job growth, and an even longer timeline for housing market recovery. Growth Has Been Slow In the First Half of 2011 The second estimate of Q1 GDP released indicated that growth in Q1 was at an annual rate of 1.8 percent. This was the same estimate as the advance report, although there were revisions to the relative contributions to growth by the various components that make up GDP. There were upward revisions to exports, private inventory investment, and business fixed investment, but these were offset by a significant downward revision to person al consumption expenditures and an upward revision to imports, which contributes negatively to growth. The 1.8 percent growth rate in Q1 was driven by the same main categories: PCE (+2.2 percent), private inventory investment (+$52.2B), exports (+9.2 percent), and business fixed investment (+ 3.4 percent). Drags to growth were federal government spending and state and local government spending. Imports increased 7.5 percent. The ISM’s Manufacturing Index decreased to 53.5 in April from 60.4 in March, the largest single month decrease since January 1984 and the lowest level of the index September 2009, a sign that even though manufacturing continues to expand, the rate of growth has slowed dramatically. The index had reached a seven year high in February, but has now decreased in each of the last three months. The component indexes for new orders, production, and employment all decreased as well, but all OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 12 Commercial Real Estate/Multifamily Finance Quarterly Data Book remain above 50, which indicate that there is growth yet in those categories. The inventories index decreased to below 50 for the third time in four months. The ISM’s Nonmanufacturing Index increased slightly in April to 54.6 from 52.8 in March. This indicated overall sector growth, but still at a relatively slow pace. The business activity/production component was slightly lower, but new orders and employment saw increases. The factory orders report for April showed a decrease in total new orders of 1.2 percent from March. Excluding the volatile transportation component, new orders were down 0.2 percent. The transportation component, on its own, saw a 9.3 percent decrease from the previous month. Other notable changes in April were durable goods orders, which declined 3.6 percent, the machinery component, for which orders decreased 2.8 percent, and computers and electronic products, which saw a 1.4 percent increase. Shipments of nondefense capital goods, excluding aircraft, decreased 1.5 percent in April, and new orders for nondefense capital goods, excluding aircraft, decreased 2.3 percent from the previous month. Both of these indicators indicate potentially weaker business investment expenditures for the Q2 GDP estimates. Inventories grew for manufacturing industries as a whole, increasing 1.3 percent from the previous month, driven by a 5.7 percent increase in computers and a 2.0 percent increase in consumer goods. The Consumer Price Index (CPI) for All Urban Consumers increased by 0.2 percent in May on a seasonally adjusted basis. It was the smallest monthly increase in the index since November 2010 but is still the 16th straight month with a positive increase. The all items CPI has increased by 3.6 percent over the past year, on an unadjusted basis. Notably, the core CPI, which is all items less food and energy, increased 0.3 percent, the largest monthly increase since May 2006. This was driven by increases in the indexes Q1 2011 for apparel and new and used motor vehicles. The energy index decreased by 1.0 percent and the gasoline index decreased by 2.0 percent. The increase in the gasoline index broke the trend of 10 cycles of positive monthly increases. The energy index was still 20.7 percent higher than where it was a year ago. The housing index increased by 0.20 percent, driven largely by a 1.9 percent increase in lodging away from home. Industrial production in the US was slightly lower in May compared to April. Increases in manufacturing and mining were balanced by a decrease in utilities output. Capacity utilization was unchanged in May at 76.7 percent, and remains below longer term historical averages. We expect GDP growth in the second half will pick up from the 1.8 percent pace in the first quarter, averaging about 2.8 percent for the year. Growth will be around the same pace in 2012 due to the expiration of the FICA holiday, as both business fixed investment and PCE pull back slightly, as these are offset by higher residential fixed investment and a smaller trade deficit. Job growth will be in the region of 150,000 jobs per month for the next 12 months, and we expect the unemployment rate to end 2011 at 8.7 percent before decreasing to around 7.8 percent by the end of 2012. Disappointing job market data Total nonfarm payrolls increased by 54,000 jobs in May, with private payrolls increasing by 83,000 and government payrolls decreasing by 29,000. Most of the growth in employment for May came from private service-providing industries, with professional and business services and education and health services seeing the most significant increases, 44,000 jobs and 34,000 jobs, respectively. The total increase in payrolls was the smallest since outright declines in September 2010. In addition, the previous two months’ payroll numbers were revised downwards by a total of 39,000 jobs. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 13 Commercial Real Estate/Multifamily Finance Quarterly Data Book The unemployment rate increased to 9.1 percent from 9.0 percent in May, with the labor force participation rate remaining unchanged at 64.2 percent for the fifth consecutive month. The number of new entrants decreased by 115,000 to 1.2 million workers and the number of reentrants increased by 58,000 to 3.4 million workers. The number of workers who were long-term unemployed was 6.2 million, an increase of 361,000, and this share increased to 45.1 percent from 43.4 percent previously. The number of discouraged workers fell to 822,000, down 167,000 from the previous month and down 261,000 from the previous year. The number of discouraged workers is the lowest since October 2009. The U6 measure of labor underutilization decreased to 15.8 percent from 15.9 percent in April. However, the payroll numbers are not as bad as they first appear. On a nonseasonally adjusted basis, private sector payrolls actually increased by 723,000 in May. Looking at the jobs numbers is on a year over year basis, the non-seasonally adjusted increase for May when compared to May 2010 was the largest increase for May since May 2007. Similarly, the April increase was the largest April increase since April 2005, the March increase was the largest since March 2006 and the February increase was the largest since February 2006. Q1 2011 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 14 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011   OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 15 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011   OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 16 Commercial Real Estate/Multifamily Finance Quarterly Data Book TREASURY YIELDS AND BANK RATES Federal Reserve Statistical Release H-15 Q1 2011 Treasury Yield Curve 6.0 5.0 4.0 3.0 2.0 1.0 3-Month May-11 May 11 1-Year Dec-10 Dec 10 3-Year Dec-09 Dec 09 5-Year Dec-08 Dec 08 7-Year Dec-07 Dec 07 10-Year Dec-06 Dec 06 Ten Year Treasury and Ten Year Swaps 8.0 7.0 60 6.0 5.0 4.0 3.0 2.0 1.0 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 10-Year Treasury 10 Year Swaps Source: Federal Reserve Board H-15 Report p Yields on actively traded issues adjusted to constant maturities. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 17 Commercial Real Estate/Multifamily Finance Quarterly Data Book TREASURY YIELDS AND BANK RATES Federal Reserve Statistical Release H-15 Q1 2011 3-Month Treasury Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec 05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 May-10 Jun-10 J 10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan 11 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Change in Rate Mayt M 10 to May11 5.94 1.72 1.21 0.91 2.22 3.97 4.97 3.07 0.03 0.05 0.14 0.16 0.12 0 12 0.16 0.16 0.15 0.13 0.14 0.14 0.15 0.13 0.10 0.06 0.04 1-Year Treasury 5.60 2.22 1.45 1.31 2.67 4.35 4.94 3.26 0.49 0.37 0.29 0.37 0 32 0.32 0.29 0.26 0.26 0.23 0.25 0.29 0.27 0.29 0.26 0.25 0.19 3-Year Treasury 5.26 3.62 2.23 2.44 3.21 4.39 4.58 3.13 1.07 1.38 0.99 1.32 1.17 1 17 0.98 0.78 0.74 0.57 0.67 0.99 1.03 1.28 1.17 1.21 0.94 5-Year Treasury 5.17 4.39 3.03 3.27 3.60 4.39 4.53 3.49 1.52 2.34 1.93 2.18 2 00 2.00 1.76 1.47 1.41 1.18 1.35 1.93 1.99 2.26 2.11 2.17 1.84 7-Year Treasury 5.28 4.86 3.63 3.79 3.93 4.41 4.54 3.74 1.89 3.07 2.66 2.86 2 66 2.66 2.43 2.10 2.05 1.85 2.02 2.66 2.72 2.96 2.80 2.84 2.51 10-Year Treasury 5.24 5.09 4.03 4.27 4.23 4.47 4.56 4.10 2.42 3.59 3.29 3.42 3 20 3.20 3.01 2.70 2.65 2.54 2.76 3.29 3.39 3.58 3.41 3.46 3.17 10-Year Swap 6.27 5.82 4.48 4.65 4.63 5.01 5.03 4.76 2.70 3.71 3.39 3.46 3 27 3.27 3.01 2.69 2.65 2.58 2.87 3.39 3.45 3.67 3.52 3.52 3.25 (0.12) (0.18) (0.38) (0.34) (0.35) (0.25) (0.21) Source: Federal Reserve Board H-15 Report Yields on actively traded issues adjusted to constant maturities. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 18 Commercial Real Estate/Multifamily Finance Quarterly Data Book EMPLOYEES ON NONFARM PAYROLLS Number of Employees on Nonfarm Payrolls Seasonally Adjusted, Thousands of Employees Q1 2011 Year-over-year Change 6,000 4,000 2,000 (2,000) (4,000) (6,000) (8,000) 1990 0 1991 1 1992 2 1993 3 1994 4 1995 5 1996 6 1997 7 1998 8 1999 9 2000 0 2001 1 2002 2 2003 3 2004 4 2005 5 2006 6 2007 7 2008 8 2009 9 2010 0 2011 1 Total Non-Farm Service Producing Goods Producing Month-over-month Change 600 400 200 (200) (400) (600) (800) (1,000) 1990 990 1991 991 1992 992 1993 993 1994 994 1995 995 1996 996 1997 997 1998 998 1999 999 2000 000 2001 001 2002 002 2003 003 2004 004 2005 005 2006 006 2007 007 2008 008 2009 009 2010 010 2011 011 Service Producing Goods Producing Source: Bureau of Labor Statistics OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 19 Commercial Real Estate/Multifamily Finance Quarterly Data Book EMPLOYEES ON NONFARM PAYROLLS Number of Employees on Nonfarm Payrolls Seasonally Adjusted, Thousands of Employees Q1 2011 Service Producing Employees Goods Producing Total Nonfarm Change Service Goods Producing Producing Total Nonfarm Dec 2000 Dec 2001 Dec 2002 Dec 2003 Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 107,913 107,630 107,996 108,567 110,314 112,441 114,491 116,016 114,071 111,555 112,463 24,572 23,093 22,187 21,703 22,003 22,372 22,400 21,967 20,312 17,765 17,797 132,485 130,723 130,183 130,270 132,317 134,813 136,891 137,983 134,383 129,320 130,260 Year-over-year 1,960 (7) 1,953 (283) (1,479) (1,762) 366 (906) (540) 571 (484) 87 1,747 300 2,047 2,127 369 2,496 2,050 28 2,078 1,525 (433) 1,092 (1,945) (1,655) (3,600) (2,516) (2,547) (5,063) 908 32 940 Month-over-month 457 1 458 (192) (192) (77) 28 (49) (58) (1) (59) (23) (6) (29) 170 1 171 85 8 93 148 4 152 30 38 68 154 81 235 154 40 194 194 38 232 51 3 54 May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Oct 2010 Nov 2010 Dec 2010 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 y Percent change May 2010 to May 2011 112,410 112,218 112,141 112,083 112,060 112,230 112 230 112,315 112,463 112,493 112,647 112,801 112,995 113,046 17,763 17,763 17,791 17,790 17,784 17,785 17 785 17,793 17,797 17,835 17,916 17,956 17,994 17,997 130,173 129,981 129,932 129,873 129,844 130,015 130 015 130,108 130,260 130,328 130,563 130,757 130,989 131,043 0.6% 1.3% 0.7% Source: Bureau of Labor Statistics OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 20 Commercial Real Estate/Multifamily Finance Quarterly Data Book Change in Owner- and Renter-Occupied Housing Units Thousands of Units Year-over-year Change 2,500 2,000 1,500 1,000 500 (500) (1,000) (1,500) 1990 1995 2000 2005 Change in Owner-occupied Units Q1 2011 2010 Change in Renter-occupied Units Quarter over quarter Quarter-over-quarter Change 1,200 1,000 800 600 400 200 (200) (400) (600) (800) (1,000) 1990 1995 2000 2005 Change in Owner-occupied Units 2010 Change in Renter-occupied Units Source: MBA, U.S. Census Bureau and Haver Analytics OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 21 Commercial Real Estate/Multifamily Finance Quarterly Data Book Owner- and Renter-Occupied Housing Units Thousands of Units at End-of-period Q1 2011 Number of Occupied Units Total T t l Owner O Renter R t 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 91,728 92,691 93,980 95,717 96,797 97,545 98,421 99,743 101,115 102,330 103,576 104,508 105,446 106,069 108,166 109,487 110,270 110,766 110,740 111,370 112,451 112 451 58,798 59,508 60,523 61,450 62,144 63,502 64,367 65,531 67,140 68,459 69,914 71,065 72,020 72,763 74,851 75,546 75,976 75,099 74,750 74,841 74,780 74 780 32,930 33,183 33,457 34,267 34,653 34,043 34,054 34,212 33,975 33,871 33,662 33,443 33,426 33,306 33,315 33,941 34,294 35,667 35,991 36,529 37,671 37 671 Year-over-year Change Total T t l Owner O Renter R t 750 963 1,289 1,737 1,080 748 876 1,322 1,372 1,215 1,246 932 938 623 2,097 1,321 783 496 (26) 630 1,081 1 081 754 710 1,015 927 693 1,358 866 1,164 1,609 1,318 1,455 1,152 954 744 2,088 695 430 (877) (350) 91 (61) (4) 253 274 810 387 (610) 10 158 (237) (103) (209) (220) (16) (121) 9 626 353 1,373 324 539 1,142 1 142 2008 - Q1 2008 - Q2 2008 - Q3 2008 - Q4 2009 - Q1 2009 - Q2 2009 - Q3 2009 - Q4 2010 - Q1 2010 - Q2 2010 - Q3 2010 - Q4 2011 - Q1 110,340 110,584 110,887 110,740 110,746 111,299 111,222 111,370 111,406 111,667 111,914 112,451 112,164 74,811 75,308 75,292 74,750 74,532 75,016 75,186 74,841 74,753 74,705 74,870 74,780 74,477 35,529 35,276 35,595 35,991 36,214 36,283 36,036 36,529 36,653 36,962 37,044 37,671 37,687 Quarter-over-quarter Change (426) (289) (137) 244 497 (253) 303 (15) 318 (147) (543) 396 6 (217) 223 553 483 70 (77) 171 (248) 148 (345) 493 36 (87) 123 261 (48) 309 247 165 82 537 (91) 628 (287) (303) 16 Source: MBA, U.S. Census Bureau and Haver Analytics OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 22 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 2. Commercial/Multifamily Finance Environment Extract of Commercial Real Estate Comments from the Federal Reserve Board’s Beige Book June 8, 2011 Prepared at the Federal Reserve Bank of New York and based on information collected on or before May 27, 2011. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials. NATIONAL SUMMARY Commercial and industrial real estate markets have generally been steady since the last report, though there have been scattered signs of a pickup. Commercial leasing markets showed modest signs of improvement in the Richmond and San Francisco Districts. Boston and Dallas noted some firming in property sales markets, but Kansas City reported declines in prices for office buildings. Non-residential construction, though widely reported to be at very low levels, rose modestly in the Boston, Chicago, Minneapolis, and Dallas Districts, though Chicago noted that public sector projects are becoming smaller. Cleveland observed a pickup in industrial and high-end commercial development but a pullback in healthcare-related projects. Richmond reported some pockets of strength in the retail market. More broadly, contacts in a number of Districts expressed a general sense of optimism about the outlook for the second half of 2011. Boston reported some easing in commercial real estate lending, but New York reported tighter standards in that segment. Credit standards on home mortgage loans tightened somewhat in the St. Louis District. A number of Districts noted improvements in overall credit quality: specifically, Philadelphia, Cleveland, Richmond, Kansas City, Dallas, and San Francisco. New York indicated rising delinquency rates on consumer loans but declining rates on commercial loans and mortgages. FIRST DISTRICT—BOSTON Across the region, contacts report that commercial leasing activity remains modest, especially in the office sector where job growth has been tepid. The Hartford office market shows very light leasing activity and negligible absorption. In Providence, office leasing volume was also very light, but rents are said to be firming up. Office leasing activity in Boston is described as slow-to-moderate, and some say recent activity is slower than in the first quarter. Boston deals consist largely of tenant renewals, resulting in little net absorption. The biotechnology and pharmaceuticals sector in Boston is seen as comparatively dynamic, generating strong demand for office space in Cambridge and planned new construction in Boston's waterfront area. In Portland, activity is flat for the most part, although at least one significant office leasing deal was signed. Investor interest in apartments remains strong in Boston, with some contacts expressing concern that sales prices are getting too high; interest in prime office properties also strengthened in Boston. The lending environment for commercial real estate is described as increasingly favorable to borrowers. The outlook among contacts is cautiously optimistic. All expect at least slow growth in office and retail demand for the remainder of 2011 and some see potential for significant improvement in market conditions by early 2012, although a few mention risks posed by fiscal conditions and related political uncertainty at both the state and national levels. SECOND DISTRICT—NEW YORK OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 23 Commercial Real Estate/Multifamily Finance Quarterly Data Book Commercial real estate markets have been largely steady since the last report. Office markets showed signs of modest improvement in New York City, Long Island, and most of upstate New York, as vacancy rates edged down while asking rents were steady to up slightly. However, market conditions weakened somewhat in northern New Jersey, Westchester and Fairfield Counties, and in the Albany area. Industrial vacancy rates rose in Long Island but were little changed in other markets. In much of the District, asking rents on industrial properties, which had been declining through the end of 2010, have leveled off or moved up modestly in recent months. THIRD DISTRICT—PHILADELPHIA Commercial and industrial market conditions in the Third District have shown little change since the previous Beige Book, according to area nonresidential real estate contacts, although some noted that office vacancy rates have edged down slightly in some areas. Rents have been steady in most areas, and concessions remain common. Contacts in commercial real estate reported that demand for space in Class A office buildings has strengthened relative to Class B space as local companies relocate upon lease expirations. "Companies are trading up for higher quality," one contact said. This trend is expected to continue for the rest of this year, and any reduction in vacancy rates for less desirable buildings is expected to lag the modest decline in Class A vacancy rates that commercial real estate agents forecast for the balance of 2011. Industrial rents have been flat, but some contacts expect them to rise toward the end of the year as demand for space grows in the absence of new supply. FOURTH DISTRICT—CLEVELAND Information on nonresidential construction varied widely. However, one aspect our contacts agreed on was a moderate improvement in inquiries. Activity is being driven by industrial projects and high-end projects (greater than $100 million) that are now in the construction phase, after several years of planning. We heard reports of a pullback in healthcare-related work. A Q1 2011 majority of our contacts expect that activity will slowly improve as the year progresses. Financing is more readily available if developers are willing to increase their equity share. We heard reports of increased prices for building materials, particularly for steel. One contact noted that materials suppliers are holding back price increases due to a lack of demand. Contractors are absorbing rising materials prices in their margins. General contractors held payrolls steady, and they expect little, if any, new permanent hiring in the upcoming months. FIFTH DISTRICT—RICHMOND Commercial real estate activity was mixed across market segments and geographic areas of the District over the last month. Pockets of modest strength were noted in demand for retail space in the Hampton Roads area, as gains in retail sales in recent months bolstered retailers' confidence, according to a local Realtor. A West Virginia Realtor reported that the leasing of office space had picked up, but both retail and industrial demand remained stagnant. However, the demand for office space in Baltimore was described as "spotty at best" by one Realtor. A central Virginia Realtor noted improved commercial leasing activity and modest gains in demand for the retail space, but leasing of industrial space was unchanged over the last month. A North Carolina Realtor reported modest, but widespread improvements in leasing, while several contacts in the D.C. area cited mostly softer leasing activity over the last few weeks. Contacts generally characterized rents as having stabilized, and several Realtors stated that banks were more willing to lend than earlier in the year. A Maryland contact in commercial construction stated that area contractors were unable to increase prices due to weak demand, but subcontractors were having more success at passing though increases in commodity costs. SIXTH DISTRICT—ATLANTA Nonresidential construction activity remained at low levels during April and May. Commercial brokers indicated that most markets continued to stabilize, but the pace OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 24 Commercial Real Estate/Multifamily Finance Quarterly Data Book of activity remained slow. Growing demand for apartments spurred an increase in multifamily development in several parts of the region. Overall, commercial construction activity is expected to remain at low levels for the rest of the year. SEVENTH DISTRICT—CHICAGO Nonresidential construction edged up with stronger demand from the automotive industry, small retail projects, and renovation. Contacts indicated that while more private sector building projects are coming up for bid, stiff competition continues to put downward pressure on pricing. Furthermore, while public sector projects remain a source of strength, they are becoming smaller. Commercial real estate conditions were little changed, with vacancy rates steady and landlords keeping commercial rents low to maintain occupancy at existing levels. EIGHTH DISTRICT—ST. LOUIS Commercial and industrial real estate market conditions were mixed. Compared with the fourth quarter of 2010, first quarter 2011 suburban office vacancy rates increased in St. Louis, decreased in Little Rock and Louisville, and remained constant in Memphis. The downtown office vacancy rates increased in Louisville and St. Louis, decreased in Memphis, and stayed the same in Little Rock. Industrial vacancy rates decreased for Louisville, Memphis, and St. Louis but increased for Little Rock. Commercial and industrial construction activity remained slow throughout most of the District. Contacts in Little Rock noted that commercial construction has remained fairly weak. Contacts in St. Louis and northwest Arkansas also noted weak commercial construction activity. In contrast, some contacts in southwestern Illinois and Kentucky noted that overall construction has increased recently. NINTH DISTRICT—MINNEAPOLIS Commercial real estate markets were steady since the last report. According to industry analysts in the Minneapolis-St. Paul area, office vacancy rates declined slightly, retail vacancy was flat and industrial Q1 2011 vacancy rates did not change much. Home sales during mid-May in Minneapolis-St. Paul were down from last year's tax-creditdriven sales, while new listings increased. April home sales in Billings, Mont., also decreased from last year's tax-credit-driven sales, while the number of homes available for sale increased. Meanwhile, the number of homes for sale in both Sioux Falls and Fargo was down from a year ago. The inventory of homes held by lenders in Minneapolis also increased. Multifamily housing vacancy rates declined, and rents increased over the past few months. TENTH DISTRICT—KANSAS CITY Commercial real estate activity was mostly flat, though it was slightly stronger than a year ago and contacts had a more positive outlook for future months. Vacancy and absorption rates were steady but expected to improve. Office prices and rents declined and were below year-ago levels in most cities. One contact noted continued obstacles in financing, and another firm said projects have decreased in overall size. ELEVENTH DISTRICT—DALLAS Private nonresidential demand has improved. Leasing activity is growing and there are reports that industrial and office construction are increasing from very low levels. Sales of commercial buildings are also picking up across the District. TWELFTH DISTRICT—SAN FRANCISCO By contrast, conditions continued to be stronger in apartment markets, particularly in the Seattle area: rental rates there reportedly are growing at an annual rate of 10 to 15 percent, spurring significant increases in construction activity. Vacancy rates for office and industrial space stayed elevated throughout the District, but further improvements in demand were noted for several major markets. This was particularly the case in the San Francisco Bay Area and Seattle, with revived developer interest in new construction reported for the latter area. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 25 Commercial Real Estate/Multifamily Finance Quarterly Data Book NET INVENTORY CHANGE/NET ABSORPTION COMMERCIAL/MULTIFAMILY PROPERTIES Q1 2011 Net Absorption (Thousands of Square Feet) 120,000 100,000 80,000 60,000 40,000 20,000 0 ‐20,000 ‐40,000 ‐60,000 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 Office Retail Apartment Net Inventory Change (Thousands of Square Feet) 120,000 100,000 80,000 80 000 60,000 40,000 20,000 0 ‐20,000 ‐40,000 ‐60,000 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 Office Retail Apartment Source: REIS OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 26 Commercial Real Estate/Multifamily Finance Quarterly Data Book COMMERCIAL/MULTIFAMILY PROPERTIES NET INVENTORY CHANGE LESS NET ABSORPTION THOUSANDS OF SQUARE FEET Q1 2011 Year APARTMENT 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 OFFICE 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 RETAIL 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: REIS Q1 Q2 Q3 Q4 Calendar Year YTD Q1 76,548 54,550 27,208 (6,211) 11,077 19,312 24,527 64,826 1,463 (39,371) 22,956 (7,448) (24,225) (20,042) (23,847) (19,349) 15,689 35,241 (17,848) 9,103 (10,389) (20,491) (57,353) (13,888) (14,676) 9,280 17,800 (71,586) 39,600 27,848 3,117 (12,008) 38,500 9,846 50,094 20,380 (46,527) 148,207 64,561 (14,391) (95,614) 11,842 (4,867) 99,590 138,247 (134,498) 76,548 54,550 27,208 (6,211) 11,077 19,312 24,527 64,826 1,463 (39,371) 42,606 13,626 (201) (11,483) (19,558) (9,958) 11,294 30,429 14,660 (1,751) 23,707 11,394 (1,996) (21,652) (13,917) (11,669) 13,986 32,271 4,939 17,453 8,539 (5,895) (15,582) (13,385) (9,309) 24,087 24,955 7,733 15,574 8,093 (12,298) (16,844) (5,583) 5,429 31,406 17,637 (764) 99,340 41,652 (20,390) (65,561) (52,443) (25,507) 80,773 105,292 26,568 42,606 13,626 (201) (11,483) (19,558) (9,958) 11,294 30,429 14,660 (1,751) 4,956 (1,337) 1,007 102 2,549 1,486 5,331 11,788 3,462 (663) (717) 234 (1,368) (3,892) 43 2,644 9,094 11,282 2,579 438 2,434 (1,383) 1,390 2,660 1,564 6,474 6,042 1,194 123 (512) (205) 1,448 2,267 3,825 10,395 5,565 279 4,800 819 (1,949) (952) 7,519 9,519 31,294 34,677 7,514 4,956 (1,337) 1,007 102 2,549 1,486 5,331 11,788 3,462 (663) OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 27 Commercial Real Estate/Multifamily Finance Quarterly Data Book AVERAGE RENTS AND VACANCY RATES AT COMMERCIAL/MULTIFAMILY PROPERTIES Average Rents $/Sq Ft Q1 2011 $/Month $35 $30 $25 $20 $15 $10 $5 $0 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 Q3 2010Q3 $1,100 $1,050 $1,000 $950 $900 $850 $800 $750 Office Retail Apartment (Right Scale) Average Vacancy Rates percent 20 18 16 14 12 10 8 6 4 2 0 2002Q1 Q1 2002Q3 Q3 2003Q1 Q1 2003Q3 Q3 2004Q1 Q1 2004Q3 Q3 5Q1 2005Q1 5Q3 2005Q3 Q1 2006Q1 Q3 2006Q3 Q1 2007Q1 Q3 2007Q3 8Q1 2008Q1 8Q3 2008Q3 9Q1 2009Q1 9Q3 2009Q3 Q1 2010Q1 Q1 2011Q1 Office Retail Apartment Source: REIS OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 28 Commercial Real Estate/Multifamily Finance Quarterly Data Book AVERAGE RENTS AND VACANCY RATES AT COMMERCIAL/MULTIFAMILY PROPERTIES Q1 2011 Average Asking Rents Q1 Yearoveryear % change Average Vacancy Rates (percent) Q1 Yearover-year change Year Q1 Q2 880 894 909 929 962 1,002 1,045 1,039 1,032 $ $ $ $ $ $ $ $ $ Q3 886 897 917 938 974 1,015 1,051 1,033 1,037 $ $ $ $ $ $ $ $ $ Q4 889 902 921 944 982 1,025 1,050 1,026 1,043 Q1 5.6 6.8 7.2 6.6 5.9 6.0 6.0 7.4 8.0 6.2 Q2 5.8 6.7 6.9 6.4 5.6 5.8 6.1 7.7 7.8 Q3 5.9 6.6 6.7 5.8 5.5 5.7 6.2 7.9 7.1 Q4 6.3 6.9 6.7 5.7 5.8 5.7 6.7 8.0 6.6 APARTMENT (per month) 2002 $ 876 $ 2003 $ 892 $ 2004 $ 903 $ 2005 $ 925 $ 2006 $ 951 $ 2007 $ 990 $ 2008 $ 1,035 $ 2009 $ 1,044 $ 2010 $ 1,027 $ 2011 $ 1,047 OFFICE 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 RETAIL 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: REIS (per sq. ft) $ 25.55 $ 24.45 $ 23.76 $ 23.80 $ 24.64 $ 26 65 26.65 $ 28.97 $ 28.78 $ 27.57 $ 27.66 (per sq. ft) $ 16.38 $ 16.76 $ 17.22 $ 17.74 $ 18.35 $ 19.08 $ 19.54 $ 19.40 $ 19.06 $ 18.98 2% 1% 2% 3% 4% 5% 1% -2% 2% 1.2 0.4 -0.6 -0.7 0.1 0.0 1.4 0.6 -1.8 $ $ $ $ $ $ $ $ $ 25.20 24.17 23.70 23.94 25.02 27.38 27 38 29.24 28.39 27.53 $ $ $ $ $ $ $ $ $ 24.95 24.01 23.70 24.11 25.47 27.98 27 98 29.37 28.11 27.50 $ $ $ $ $ $ $ $ $ 24.76 23.89 23.70 24.29 26.00 28.50 28 50 29.18 27.79 27.53 -4% -3% 0% 4% 8% 9% -1% -4% 0% 14.7 16.3 17.0 16.1 14.2 13.1 13 1 12.9 15.2 17.3 17.5 15.3 16.6 16.9 15.5 13.9 12.8 12 8 13.2 16.0 17.5 15.7 16.8 16.7 15.1 13.5 12.5 12 5 13.8 16.6 17.6 16.0 17.0 16.4 14.7 13.4 12.6 12 6 14.5 17.0 17.6 1.6 0.7 -0.9 -1.9 -1 1 -1.1 -0.2 2.3 2.1 0.2 $ $ $ $ $ $ $ $ $ 16.47 16.86 17.33 17.88 18.50 19.23 19.60 19.27 19.01 $ $ $ $ $ $ $ $ $ 16.58 16.98 17.49 18.06 18.73 19.33 19.59 19.21 19.01 $ $ $ $ $ $ $ $ $ 16.68 17.14 17.62 18.22 18.92 19.46 19.52 19.13 18.99 2% 3% 3% 3% 4% 2% -1% -2% 0% 7.4 7.2 7.2 7.0 6.9 7.2 7.7 9.5 10.8 10.9 7.3 7.2 7.1 6.7 6.9 7.3 8.1 10.0 10.9 7.3 7.3 7.0 6.8 7.0 7.3 8.4 10.3 10.9 7.3 7.2 7.0 6.8 7.1 7.5 8.9 10.6 10.9 -0.2 0.0 -0.2 -0.1 0.3 0.5 1.8 1.3 0.1 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 29 Commercial Real Estate/Multifamily Finance Quarterly Data Book QUARTERLY SALES OF LARGER ($5 MILLION+) COMMERCIAL/MULTIFAMILY PROPERTIES Billions of dollars, Properties and portfolios $5 million and greater Q1 2011 $160 $140 $120 $100 $80 $60 $40 $20 $2001 Q1 2001 Q2 2001 Q3 2001 Q4 2002 Q1 2002 Q2 2002 Q3 2002 Q4 2003 Q1 2003 Q2 2003 Q3 2003 Q4 2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 Apartment Retail Industrial Office Source: Real Capital Analytics. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 30 Commercial Real Estate/Multifamily Finance Quarterly Data Book QUARTERLY SALES OF LARGER ($5 MILLION+) COMMERCIAL/MULTIFAMILY PROPERTIES Billions of dollars, Properties and portfolios $5 million and greater Q1 2011 Year APARTMENT 2006 2007 2008 2009 2010 2011 INDUSTRIAL 2006 2007 2008 2009 2010 2011 OFFICE 2006 2007 2008 2009 2010 2011 RETAIL 2006 2007 2008 2009 2010 2011 TOTAL 2006 2007 2008 2009 2010 2011 Q1 Q2 Q3 Q4 Total Percent Sales change YTD Q1 Percent Sales change $ 26.39 $ 21.42 $ 13.44 $ 2.29 $ 4.80 $ 7.14 $ 18.21 $ 19.84 $ 9.46 $ 3.33 $ 5.39 $ 19.98 $ 22.91 $ 10.19 $ 3.71 $ 9.27 $ 27.76 $ 35.84 $ 5.06 $ 5.40 $ 12.30 $ $ $ $ $ 92.34 100.01 38.14 14.74 31.76 7% 8% -62% -61% 116% $ 26.39 $ 21.42 $ 13.44 $ 2.29 $ 4.80 $ 7.14 45% -19% -37% -83% 109% 49% $ 12.40 $ 12.21 $ 8.52 $ 1.51 $ 2.26 $ 2.57 $ 12.21 $ 14.53 $ 5.57 $ 2.43 $ 3.28 $ 9.76 $ 15.38 $ 4.84 $ 1.81 $ 4.16 $ 13.34 $ 10.66 $ 3.20 $ 2.51 $ 7.42 $ $ $ $ $ 47.70 52.78 22.13 8.26 17.12 21% 11% -58% -63% 107% $ 12.40 $ 12.21 $ 8.52 $ 1.51 $ 2.26 $ 2.57 75% -1% -30% -82% 50% 14% $ 24.11 $ 73.51 $ 15.52 $ 3.68 $ 4.15 $ 9.77 $ 32.05 $ 60.41 $ 16.77 $ 2.86 $ 8.03 $ $ $ $ $ 34.63 46.25 14.32 4.84 10.13 $ 46.00 $ 28.97 $ 7.65 $ 4.61 $ 19.66 $ $ $ $ $ 136.79 209.14 54.26 15.98 41.97 32% 53% -74% -71% 163% $ 24.11 $ 73.51 $ 15.52 $ 3.68 $ 4.15 $ 9.77 30% 205% -79% -76% 13% 136% $ 9.39 $ 26.61 $ 7.59 $ 2.22 $ 3.22 $ 5.16 $ 12.88 $ 14.83 $ 5.28 $ 2.08 $ 2.90 $ 15.55 $ 17.47 $ 4.23 $ 2.40 $ 5.95 $ 15.44 $ 12.07 $ 3.25 $ 6.37 $ 7.93 $ $ $ $ $ 53.26 70.98 20.35 13.07 20.01 3% 33% -71% -36% 53% $ 9.39 $ 26.61 $ 7.59 $ 2.22 $ 3.22 $ 5.16 0% 183% -71% -71% 45% 60% $ $ $ $ $ $ 72.28 133.75 45.07 9.69 14.43 24.64 $ $ $ $ $ 75.35 109.61 37.08 10.70 19.59 $ $ $ $ $ 79.92 102.01 33.57 12.77 29.52 $ $ $ $ $ 102.54 87.54 19.16 18.88 47.31 $ $ $ $ $ 330.10 432.91 134.88 52.05 110.86 17% 31% -69% -61% 113% $ $ $ $ $ $ 72.28 133.75 45.07 9.69 14.43 24.64 36% 85% -66% -78% 49% 71% Source: Real Capital Analytics. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 31 Capitalization rate 10% 12% $200 $250 $300 $350 $100 $150 0% $50 $0 2% 4% 6% 8% Price per unit or sq. ft. Quarterly Data Book Commercial Real Estate/Multifamily Finance Source: Real Capital Analytics. Properties and portfolios $5 million and greater QUARTERLY SALES PRICES OF LARGER ($5 MILLION+) COMMERCIAL/MULTIFAMILY PROPERTIES OUTLOOK Apartment Industrial Office Retail Total Apartment ENVIRONMENT Industrial Office PRODUCTION OUTSTANDING Retail SERVICING 2001 Q1 1 2001 Q2 2 2001 Q3 3 2001 Q4 4 2002 Q1 1 2002 Q2 2 2002 Q3 3 2002 Q4 4 2003 Q1 1 2003 Q2 2 2003 Q3 3 2003 Q4 4 2004 Q1 1 2004 Q2 2 2004 Q3 3 2004 Q4 4 2005 Q1 1 2005 Q2 2 2005 Q3 3 2005 Q4 4 2006 Q1 1 2006 Q2 2 2006 Q3 3 2006 Q4 4 2007 Q1 1 2007 Q2 2 2007 Q3 3 2007 Q4 4 2008 Q1 1 2008 Q2 2 2008 Q3 3 2008 Q4 4 2009 Q1 1 2009 Q2 2 2009 Q3 3 2009 Q4 4 2010 Q1 1 2010 Q2 2 2010 Q3 3 2010 Q4 4 2011 Q1 1 2001 Q1 2001 Q2 2001 Q3 2001 Q4 2002 Q1 2 2002 Q2 2 2002 Q3 2 2002 Q4 2 2003 Q1 3 2003 Q2 3 2003 Q3 3 2003 Q4 3 2004 Q1 4 2004 Q2 4 2004 Q3 4 2004 Q4 4 2005 Q1 5 2005 Q2 5 2005 Q3 5 2005 Q4 5 2006 Q1 6 2006 Q2 6 2006 Q3 6 2006 Q4 6 2007 Q1 7 2007 Q2 7 2007 Q3 7 2007 Q4 7 2008 Q1 8 2008 Q2 8 2008 Q3 8 2008 Q4 8 2009 Q1 9 2009 Q2 9 2009 Q3 9 2009 Q4 9 2010 Q1 0 2010 Q2 0 2010 Q3 0 2010 Q4 0 2011 Q1 Q1 2011 RELEASES Page 32 Commercial Real Estate/Multifamily Finance Quarterly Data Book QUARTERLY SALES PRICES OF LARGER ($5 MILLION+) COMMERCIAL/MULTIFAMILY PROPERTIES Properties and portfolios $5 million and greater Q1 2011 Price per unit or sq. ft. Q1 Yearover-year % change 22% -6% -3% -12% 41% -13% Capitalization Rate Q1 Yearover-year % change -8% 4% 1% 11% 0% -3% Year APARTMENT 2006 2007 2008 2009 2010 2011 INDUSTRIAL 2006 2007 2008 2009 2010 2011 OFFICE 2006 2007 2008 2009 2010 2011 RETAIL 2006 2007 2008 2009 2010 2011 TOTAL 2006 2007 2008 2009 2010 2011 $ $ $ $ $ $ Q1 107 100 97 85 120 104 Q2 Q3 Q4 $ 121 $ 101 $ 86 $ 86 $ 109 Q1 5.9% 6.1% 6.2% 6.9% 6.9% 6.7% Q2 6.1% 6.1% 6.4% 7.0% 6.8% Q3 6.1% 6.2% 6.5% 7.1% 6.6% Q4 6.2% 6.2% 7.0% 7.0% 6.5% ($1000/unit) $ 93 $ 102 $ 100 $ 110 $ 94 $ 114 $ 87 $ 81 $ 97 $ 116 $ $ $ $ $ $ 76 74 71 74 52 55 $ $ $ $ $ ($/sq. ft) 75 $ 75 $ 71 $ 64 $ 66 $ 69 78 71 61 69 $ $ $ $ $ 72 75 69 52 55 22% -3% -4% 5% -29% 5% 7.1% 6.9% 7.2% 8.3% 8.7% 7.7% 7.4% 6.8% 7.3% 8.3% 8.1% 7.2% 6.9% 7.5% 8.6% 8.5% 7.1% 7.2% 7.9% 8.7% 8.2% -13% -3% 4% 15% 5% -11% $ $ $ $ $ $ 214 270 240 265 144 228 $ $ $ $ $ ($/sq. ft) 217 $ 234 295 $ 254 286 $ 276 137 $ 192 202 $ 218 $ $ $ $ $ 222 265 213 176 231 16% 26% -11% 11% -46% 58% 7.0% 6.5% 6.9% 6 9% 7.9% 8.2% 7.3% 7.1% 6.3% 7.0% 7 0% 8.0% 8.0% 6.8% 6.5% 7.2% 7 2% 8.2% 7.4% 6.8% 6.5% 7.3% 7 3% 8.9% 7.1% -7% -7% 5% 15% 4% -12% $ $ $ $ $ $ 163 195 190 148 136 180 $ $ $ $ $ ($/sq. ft) 158 $ 171 191 $ 181 208 $ 185 159 $ 145 131 $ 151 $ $ $ $ $ 185 169 180 136 174 10% 20% -3% -22% -8% 32% 6.8% 6.6% 6.9% 7.3% 8.2% 7.6% 7.1% 6.5% 6.8% 7.7% 8.0% 6.9% 6.6% 6.8% 8.1% 7.7% 6.7% 6.7% 7.2% 8.2% 7.6% -7% -3% 3% 7% 12% -8% $ $ $ $ $ $ ($1000/unit or $/sq. ft)* 124 $ 128 $ 139 $ 169 $ 163 $ 149 $ 124 $ 141 $ 145 $ 127 $ 97 $ 109 $ 106 $ 117 $ 131 $ 132 145 129 121 103 125 13% 36% -27% 3% -16% 24% 6.6% 6.5% 6.7% 7.6% 7.8% 7.2% 6.9% 6.4% 6.9% 7.7% 7.7% 6.7% 6.5% 7.0% 7.9% 7.4% 6.6% 6.5% 7.3% 8.1% 7.2% -9% -1% 3% 13% 3% -8% Source: Real Capital Analytics. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 33 Commercial Real Estate/Multifamily Finance Quarterly Data Book COMMERCIAL/MULTIFAMILY PROPERTY PRICES AS REFLECTED IN SELECTED INDICES Re-Indexed Values of the Moody's/REAL CPPI and NCREIF Transaction Based Index December 2000 = 100 200 190 180 170 160 150 140 130 120 110 100 90 Q1 2011 January 2007 = 100 120 110 100 90 80 70 60 50 Jan 2007 Mar 2007 May 2007 Jul 2007 Sep 2007 Nov 2007 Jan 2008 Mar 2008 May 2008 Jul 2008 Sep 2008 Nov 2008 Jan 2009 Mar 2009 May 2009 Jul 2009 Sep 2009 Nov 2009 Jan 2010 Mar 2010 May 2010 Jul 2010 Sep 2010 Nov 2010 Jan 2011 Mar 2011 Moody's/REAL CPPI Source: MBA, Moody's Investors Services and MIT NCREIF TBI OUTLOOK Dec 2000 May 2001 Oct 2001 Mar 2002 Aug 2002 Jan 2003 Jun 2003 Nov 2003 Apr 2004 Sep 2004 Feb 2005 Jul 2005 Dec 2005 May 2006 Oct 2006 Mar 2007 Aug 2007 Jan 2008 Jun 2008 Nov 2008 Apr 2009 Sep 2009 Feb 2010 Jul 2010 Dec 2010 Moodys/REAL CPPI NCREIF TBI ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 34 Commercial Real Estate/Multifamily Finance Quarterly Data Book COMMERCIAL/MULTIFAMILY PROPERTY PRICES AS REFLECTED IN SELECTED INDICES Changes in the Moody's/REAL CPPI and NCREIF Transaction Based Index Year-over-year Change Moody's/ REAL CPPI NCREIF TBI 2001 -- December 2002 -- December 2003 -- December 2004 -- December 2005 -- December 2006 -- December 2007 -- December 2008 -- December 2009 -- December 2010 -- December 3.7% 8.5% 7.1% 16.3% 14.7% 8.4% 8.3% -14.9% -29.2% -2.1% Month-over month Moody's/ REAL CPPI 2009 -- March 2009 -- April 2009 -- May 2009 -- June 2009 -- July 2009 -- August 2009 -- September 2009 -- October 2009 -- November 2009 -- December 2010 -- January 2010 -- February 2010 -- March 2010 -- April 2010 -- May 2010 -- June 2010 -- July 2010 -- August 2010 -- September 2010 -- October 2010 -- November 2010 -- December 2011 -- January 2011 -- February 2011 -- March -1.7% -8.6% -7.6% -1.0% -5.1% -3.0% -3.9% -1.5% 1.0% 4.1% 1.0% -2.6% -0.5% 1.7% 3.6% -4.0% -3.1% -3.3% 4.3% 1.3% 0.6% -0.9% -1.2% -3.3% -4.2% 0.6% 7.2% 1.3% 11.0% 27.2% 17.3% -1.2% -15.0% -22.5% 19.3% Quarter-over-quarter Moody's/ REAL CPPI -7.7% Q1 2011 NCREIF TBI -5.1% -16.4% -17.9% -11.5% 4.6% 3.6% -4.9% -2.1% 6.4% 1.2% 6.9% -2.3% -6.2% 1.1% 11.9% -8.5% -0.7% Current price relative to peak 53% 72% Source: Mortgage Bankers Association, Moody's Investors Services and MIT OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 35 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 PROFILE OF COMMERCIAL REAL ESTATE PROPERTIES BY CBSA, COUNTY AND STATE Top 10 CBSA Ranked by Total Number of Commercial Properties, as of June 5, 2011 CBSA Name New York-Northern New Jersey-Long Island, NY-NJ-PA Chicago-Joliet-Naperville, IL-IN-WI Houston-Sugar Land-Baytown, TX Riverside-San Bernardino-Ontario, CA Los Angeles-Long Beach-Santa Ana, CA Dallas-Fort Worth-Arlington, TX Phoenix-Mesa-Glendale, AZ Atlanta-Sandy Springs-Marietta, GA Philadelphia-Camden-Wilmington, PA-NJ-DE-MD St. Louis, MO-IL Number of Properties 708,358 661,805 591,241 601,325 501,880 457,328 361,255 308,088 307,721 259,770 Top 10 Counties Ranked by Total Number of Commercial Properties County LOS ANGELES County, CA COOK County, IL RIVERSIDE County, CA SAN BERNARDINO County, CA MARICOPA County, AZ HARRIS County, TX LEE County, FL SAN DIEGO County, CA KERN County, CA MOHAVE County, AZ Number of Properties 431,520 363,490 332,034 269,291 257,346 239,696 228,267 213,458 182,908 178,211 Top 10 States Ranked by Total Number of Commercial Properties State TX CA FL OH IL NY PA IN NC IA Source: CoreLogic www.corelogic.com/cre Number of Properties 3,894,737 2,732,576 2,523,390 1,756,517 1,446,187 1,259,863 1,213,165 1,164,726 1,091,170 1,036,619 The data used in this report is compiled from multiple resources including county tax assessor and recorder of deeds sources, as well as proprietary resources. Property level records were used in aggregate to derive all the charts & graphs. Other property type represents commercially classified properties that are not categorized Apartment, Industrial, Retail, Office or Hotel in county records. Some examples are medical offices, agricultural sites such as farms, forests and vineyards as well as various recreational buildings. This classification also represents properties that were defined by the reporting appraisers office with a generic “commercial” classification and no sub-classification was available to us via the public records. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 36 Commercial Real Estate/Multifamily Finance Quarterly Data Book PROFILE OF COMMERCIAL REAL ESTATE SALES Total Sales of U.S. Commercial and Multifamily Properties by Dollar Amount 1Q 2011 Number of Properties Sold Apartment (10 or more units) Less than $1 million $1 - $5 million $5 - $10 million Greater than $10 million Industrial Less than $1 million $1 - $5 million $5 - $10 million Greater than $10 million Retail Less than $1 million $1 - $5 million $5 - $10 million Greater than $10 million Office Less than $1 million $1 - $5 million $5 - $10 million Greater than $10 million Hotel Less than $1 million $1 - $5 million $5 - $10 million Greater than $10 million Other Less than $1 million $1 - $5 million $5 - $10 million Greater than $10 million 1,510 907 113 117 605 743 111 61 818 824 68 64 378 337 45 81 39 97 17 20 663 549 67 36 Q1 2011 Rolling 4 Quarters Number of Properties Sold Percent 6,668 4,047 515 568 2,719 3,419 495 377 3,546 3,576 342 281 1,764 1,501 205 331 199 399 63 86 3,039 2,744 268 191 17,935 15,686 1,888 1,834 56.5% 34.3% 4.4% 4.8% 38.8% 48.8% 7.1% 5.4% 45.8% 46.2% 4.4% 3.6% 46.4% 39.5% 5.4% 8.7% 26.6% 53.4% 8.4% 11.5% 48.7% 44.0% 4.3% 3.1% 48.0% 42.0% 5.1% 4.9% Percent 57.0% 34.3% 4.3% 4.4% 39.8% 48.9% 7.3% 4.0% 46.1% 46.4% 3.8% 3.6% 44.9% 40.1% 5.4% 9.6% 22.5% 56.1% 9.8% 11.6% 50.4% 41.7% 5.1% 2.7% 48.5% 41.8% 5.1% 4.6% Total 4,013 Less than $1 million 3,457 $1 - $5 million 421 $5 - $10 million 379 Greater than $10 million Source: CoreLogic www.corelogic.com/cre The data used in this report is compiled from multiple resources including county tax assessor and recorder of deeds sources, as well as proprietary resources. Property level records were used in aggregate to derive all the charts & graphs. Other property type represents commercially classified properties that are not categorized Apartment, Industrial, Retail, Office or Hotel in county records. Some examples are medical offices, agricultural sites such as farms, forests and vineyards as well as various recreational buildings. This classification also represents properties that were defined by the reporting appraisers office with a generic “commercial” classification and no sub-classification was available to us via the public records. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 37 Commercial Real Estate/Multifamily Finance Quarterly Data Book MULTIFAMILY BUILDING PERMITS, STARTS AND COMPLETIONS Thousands of Units Permitted, Started and Completed in Structures with 5 or More Units, Seasonally Adjusted Annual Rate Q1 2011 1968 to present 1400 1200 1000 800 600 400 200 0 1968 1969 1971 1972 1974 1975 1977 1979 1980 1982 1983 1985 1987 1988 1990 1991 1993 1994 1996 1998 1999 2001 2002 2004 2006 2007 2009 Completions 5+ Permits 5+ Starts 5+ Median Starts 2001 - present (279) 1996 to present 600 500 400 300 200 100 0 1996 1996 1997 1998 1999 2000 2001 2001 2002 2003 2004 2005 2006 2006 2007 2008 2009 2010 2011 Completions 5+ Permits 5+ Starts 5+ Median Starts 2001 - present (279) Source: U.S. Census Bureau OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 38 Commercial Real Estate/Multifamily Finance Quarterly Data Book MULTIFAMILY BUILDING PERMITS, STARTS AND COMPLETIONS Number of Units Permitted, Started and Completed in Structures with 5 or More Units, Seasonally Adjusted Annual Rate Q1 2011 Permits Thousands of Units Starts Completions Percent Change Permits Starts Completions Year-over-year -6.2% -2.4% 1.8% 1.8% -2.1% -7.8% 1.8% 5.2% 2.6% 1.3% 2.4% -9.5% 5.9% -3.9% 10.0% 6.3% 2.8% -10.1% -1.3% -6.0% 10.2% -6.5% -5.3% -11.0% -17.7% -4.1% 9.6% -59.0% -63.4% -6.3% 7.8% 7.2% -43.8% Month-over-month -9.3% 0.0% -0.6% 11.0% -23.1% 5.0% 2.1% 22.9% -48.7% 3.5% 61.8% 22.7% -10.1% -12.7% 15.1% -7.5% -35.4% -16.1% 0.0% -11.8% -0.9% 29.0% 18.3% -12.3% -19.4% 92.8% -14.0% 6.2% -40.1% 40.7% 21.2% 46.4% 77.7% -11.4% -25.0% -49.8% 29.3% 8.9% 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 329 335 341 346 366 389 384 359 295 121 131 299 293 308 315 303 311 293 277 266 97 104 305 281 288 261 287 258 284 253 277 260 146 May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Oct 2010 Nov 2010 Dec 2010 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Percent change May 2010 to May 2011 127 141 144 149 134 124 124 160 129 137 166 147 190 49.6% 108 83 102 165 144 93 82 97 187 112 164 123 134 24.1% 180 189 97 119 137 115 114 100 86 121 215 108 108 -40.0% Source: U.S. Census Bureau OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 39 Commercial Real Estate/Multifamily Finance Quarterly Data Book NEW PRIVATELY OWNED HOUSING UNITS STARTED, BY PURPOSE Thousands of Units Q1 2011 Quarter 2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4 2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 120 TOTAL 425 540 532 460 448 576 568 478 464 521 457 358 322 410 350 272 231 283 237 154 114 154 162 124 134 172 161 120 125 1Family Units 345 456 440 370 369 485 471 392 382 433 372 278 260 333 265 188 162 194 163 103 78 124 138 105 114 142 119 96 89 Units in Buildings with 2 or More Units For For Percent Total Rent Sale for Rent 80 84 92 90 79 91 97 86 82 88 85 80 62 77 85 84 69 89 74 51 36 30 24 19 20 30 42 24 36 61 56 55 54 49 55 46 51 42 46 48 47 38 42 48 60 52 67 54 43 31 25 19 16 16 26 36 21 30 19 28 37 36 30 36 51 35 39 42 37 33 24 35 37 24 17 22 20 8 5 5 5 3 4 4 6 3 5 76% 67% 60% 60% 62% 60% 47% 59% 51% 52% 56% 59% 61% 55% 56% 71% 75% 75% 73% 84% 86% 83% 79% 84% 80% 87% 86% 88% 83% 2+ unit for sale 100 2+ unit for rent Thousands of units 80 60 40 20 0 2003Q4 2004Q4 2005Q4 2006Q4 2007Q4 2008Q4 2009Q4 2010Q4 Source: U.S. Census Bureau OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES Page 40 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 3. Production Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations May 5, 2011 First quarter 2011 commercial and multifamily mortgage originations were 89 percent higher than during the same period last year and 25 percent lower than during the fourth quarter of 2010, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. The decrease from fourth quarter 2010 reflects the industry’s usual push to finalize deals before the end of the year, and subsequent drop-offs in first quarter numbers. “The pace of commercial and multifamily mortgage lending continued to increase in the first quarter of this year,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The percentage increases in commercial/multifamily mortgage origination volumes for the first three months of 2011 were the highest of any first quarter since 2002, and the volumes were nearly double the volume seen during the first quarter of 2010.” FIRST QUARTER 2011 EIGHTY-NINE PERCENT HIGHER THAN FIRST QUARTER 2010 The 89 percent overall increase in commercial/multifamily lending activity during the first quarter of 2011 over the same period in 2010 was driven by increases in originations for all property types. When compared to the first quarter of 2010, this included a 465 percent increase in loans for hotel properties, a 194 percent increase in loans for industrial properties, a 104 percent increase in loans for multifamily properties, a 92 percent increase in loans for office properties, a 91 percent increase in loans for health care properties, and a 13 percent increase in loans for retail properties. Among investor types, first quarter 2011 originations for conduits for CMBS increased 391 percent compared to last year’s first quarter. There was also a 126 percent increase in loans for life insurance companies, a 73 percent increase for loans for commercial bank portfolios, and a 59 percent increase for Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac. FIRST QUARTER 2011 TWENTY-FIVE PERCENT LOWER THAN FOURTH QUARTER 2010 First quarter 2011 commercial/multifamily mortgage originations were 25 percent lower than originations in the fourth quarter Commercial/Multifamily Mortgage Bankers Originations Index 2001 quarterly average = 100 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING PRODUCTION SERVICING RELEASES Page 41 Commercial Real Estate/Multifamily Finance Quarterly Data Book of 2010. This includes an 83 percent decrease for health care properties, a 48 percent decrease for retail properties, a 44 percent decrease for hotel properties, a 28 percent decrease for multifamily properties, and a 15 percent decrease for office properties. Originations for industrial properties increased 12 percent. Among investor types, first quarter 2011 originations for conduits for CMBS decreased 58 percent compared to the fourth quarter of 2010. There was also a 45 percent decrease for GSEs and a 15 percent decrease for life insurance companies. Originations for commercial bank portfolios increased by 21 percent. To view the report, please visit the following Web link: http://www.mortgagebankers.org/files/Rese arch/CommercialOriginations/1Q11CMFOrigi nationsSurvey.pdf Detailed statistics on the size and scope of the commercial/multifamily origination market are available from these MBA commercial/multifamily research reports. • Commercial Real Estate/Multifamily Finance: Annual Origination Volume Summation, 2010 • Commercial Real Estate/Multifamily Finance Firms: Annual Origination Volumes, 2010 Q1 2011 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING PRODUCTION SERVICING RELEASES Page 42 Commercial Real Estate/Multifamily Finance Quarterly Data Book Commercial/Multifamily Mortgage Bankers Originations Index By Investor Group Origination Volume Index (2001 Avg Qtr = 100) Q1 Q2 Q3 Q4 TOTAL 2006 2007 2008 2009 2010 2011 Conduits 2006 2007 2008 2009 2010 2011 205 280 132 40 45 85 283 456 19 1 5 26 253 352 130 60 61 258 247 116 53 70 328 275 54 61 114 Percent Change, Q1-to-Q1 34% 37% -53% -70% 12% 89% 35% 61% -96% -96% 657% 391% 64% -20% -28% -80% -4% 73% 2% 12% -25% -66% 131% 126% 30% 22% 62% -26% -49% 59% $ $ $ $ $ $ $ $ $ $ $ $ Average Loan Size ($millions) Q2 Q3 $ $ $ $ $ 11.1 15.6 12.3 11.8 11.1 $ $ $ $ $ 13.6 13.3 10.8 9.9 10.5 Q1 2011 Q1 11.2 13.8 12.3 8.4 9.2 11.9 13.6 18.4 16.0 5.5 45.4 33.4 Q4 $ $ $ $ $ 13.7 16.0 9.0 11.0 13.0 343 606 9 4 11 287 206 15 2 16 519 357 6 1 62 $ $ $ $ $ 15.3 18.4 16.5 20.4 37.4 $ $ $ $ $ 15.3 14.0 40.4 18.2 30.5 $ $ $ $ $ 21.1 52.9 30.9 12.4 69.6 Commercial Banks 2006 397 2007 316 2008 228 2009 47 2010 45 2011 77 457 408 289 49 44 543 445 129 62 32 552 521 74 86 64 $ 10.3 $ 10.0 $ 11.2 $ 6.1 $ 4.9 $ 9.0 $ $ $ $ $ $ $ $ $ $ $ $ 8.7 9.9 10.1 13.4 17.0 17.5 12.9 9.8 11.7 11.4 9.8 10.8 $ 8.6 $ 15.7 $ 17.6 $ 6.1 $ 7.0 $ 15.9 $ 13.3 $ 6.0 $ 6.4 $ 4.9 $ 12.1 $ 14.0 $ 8.9 $ 8.2 $ 7.6 Life Insurance Companies 2006 140 206 2007 158 175 2008 119 128 2009 41 59 2010 94 147 2011 212 Fannie Mae/Freddie Mac 2006 94 99 2007 114 112 2008 185 186 2009 136 189 2010 70 85 2011 112 199 222 163 69 176 191 163 44 93 250 $ 9.0 $ 9.6 $ 10.7 $ 12.5 $ 16.1 $ $ $ $ $ 10.6 13.0 13.9 12.4 15.5 $ 9.1 $ 9.7 $ 7.8 $ 15.6 $ 17.0 113 181 208 143 120 138 194 164 122 202 $ $ $ $ $ 10.2 10.2 10.1 16.8 11.3 $ $ $ $ $ 12.4 14.3 13.3 14.8 12.6 $ $ $ $ $ 11.6 10.9 12.0 13.8 13.5 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING PRODUCTION SERVICING RELEASES Page 43 Commercial Real Estate/Multifamily Finance Quarterly Data Book Commercial/Multifamily Mortgage Bankers Originations Index By Property Type Origination Volume Index (2001 Avg Qtr = 100) Q1 Q2 Q3 Q4 Multifamily 2006 2007 2008 2009 2010 2011 Office 2006 2007 2008 2009 2010 2011 Retail 2006 2007 2008 2009 2010 2011 Industrial 2006 2007 2008 2009 2010 2011 Hotel 2006 2007 2008 2009 2010 2011 Health Care 2006 2007 2008 2009 2010 2011 558 762 308 36 20 110 287 471 400 82 26 50 681 2,931 371 84 99 990 815 107 57 46 676 3,035 36 74 198 166% 37% -60% -88% -46% 465% 123% 64% -15% -80% -68% 91% $ $ $ $ $ $ 24.8 31.6 40.0 67.5 12.3 27.7 $ $ $ $ $ 28.7 55.8 38.5 29.0 47.5 $ $ $ $ $ 42.5 33.8 23.1 35.3 22.0 143 180 132 51 49 99 198 321 79 27 35 68 307 384 181 43 85 96 222 254 161 80 57 168 166 195 113 89 67 155 176 123 74 101 238 220 83 77 138 Percent Change, Q1-to-Q1 23% 26% -27% -61% -5% 104% 26% 62% -75% -66% 29% 92% 55% 25% -53% -76% 98% 13% 33% 14% -37% -50% -28% 194% $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Q1 2011 Q1 11.6 11.8 12.6 9.5 9.4 11.9 15.4 24.0 15.7 9.6 13.4 17.5 9.3 11.8 15.8 11.0 14.5 15.1 8.3 10.5 11.6 18.4 9.4 14.0 Average Loan Size ($millions) Q2 Q3 $ $ $ $ $ 11.4 12.5 11.0 15.3 11.1 $ $ $ $ $ 12.3 11.8 12.1 12.9 12.6 $ $ $ $ $ Q4 14.2 15.0 11.4 12.4 13.0 255 302 105 20 55 277 191 76 33 45 375 100 28 29 79 $ $ $ $ $ 14.0 21.1 19.0 10.8 19.3 $ $ $ $ $ 18.4 17.4 15.6 14.9 14.6 $ $ $ $ $ 19.6 12.0 10.8 15.5 16.5 343 459 169 83 75 327 264 185 71 84 423 264 47 95 184 $ $ $ $ $ 8.6 12.1 13.5 16.7 10.8 $ $ $ $ $ 10.1 10.4 15.5 10.8 11.0 $ $ $ $ $ 11.6 9.1 7.5 13.6 18.9 308 286 124 43 123 270 249 151 64 145 392 196 48 76 150 $ 8.7 $ 10.2 $ 9.4 $ 7.2 $ 13.8 $ 9.8 $ 10.2 $ 9.1 $ 8.9 $ 14.6 $ $ $ $ $ 10.1 9.4 8.8 11.4 12.6 $ 24.6 $ 199.5 $ 22.5 $ 48.7 $ 50.6 532 458 758 224 54 434 1,081 442 183 99 523 540 288 289 301 $ 12.6 $ 8.4 $ 7.8 $ 3.7 $ 3.9 $ 7.1 $ 10.7 $ 11.7 $ 8.5 $ 4.7 $ 5.1 $ 9.7 $ 14.6 $ 6.5 $ 5.9 $ 9.3 $ $ $ $ $ 10.2 10.7 6.8 10.7 20.7 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING PRODUCTION SERVICING RELEASES Page 44 Commercial Real Estate/Multifamily Finance Quarterly Data Book QUARTERLY ISSUANCE OF COMMERCIAL MORTGAGE BACKED SECURITIES (CMBS) and COMMERCIAL REAL ESTATE COLLATERALIZED DEBT OBLIGATIONS (CDOs) Q1 2011 Billions of Dollars $80 $70 $60 $50 $40 $30 $20 $10 $2000 Q1 2000 Q2 2000 Q3 2000 Q4 2001 Q1 2001 Q2 2001 Q3 2001 Q4 2002 Q1 2002 Q2 2002 Q3 2002 Q4 2003 Q1 2003 Q2 2003 Q3 2003 Q4 2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 CMBS CRE CDO/Re-Remics Source: Commercial Real Estate Direct OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING PRODUCTION SERVICING RELEASES Page 45 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 QUARTERLY ISSUANCE OF COMMERCIAL MORTGAGE BACKED SECURITIES (CMBS) and COMMERCIAL REAL ESTATE COLLATERALIZED DEBT OBLIGATIONS (CRE CDOs)/RE-REMICS Billions of Dollars Annual Percent Total change YTD Q1 Percent Total change Year Q1 Q2 Q3 Q4 U.S. CMBS ISSUANCE 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $ $ $ $ $ $ $ $ $ $ $ $ 11.77 11.53 9.74 14.94 18.99 33.13 46.01 60.85 5.91 11.61 $ $ $ $ $ $ $ $ $ $ $ 13.00 15.57 14.93 20.45 24.50 39.37 42.18 75.92 6.24 1.79 2.91 $ $ $ $ $ $ $ $ $ $ $ 10.65 19.53 12.81 17.51 21.47 38.27 42.25 60.10 1.93 $ $ $ $ $ $ $ $ $ $ $ 16.64 24.53 16.54 25.09 28.82 57.40 72.25 33.30 3.18 6.18 $ $ $ $ $ $ $ $ $ $ $ 52.05 71.16 54.03 77.99 93.78 168.17 202.69 230.17 12.15 4.97 11.01 $ $ $ $ $ $ $ $ $ $ $ $ 11.77 11.53 9.74 14.94 18.99 33.13 46.01 60.85 5.91 11.61 37% -24% 44% 20% 79% 21% 14% -95% -59% 121% -2% -16% 53% 27% 74% 39% 32% -90% -100% N/A N/A CRE CDO/RE-REMICS ISSUANCE 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TOTAL 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $ $ $ $ $ $ $ $ $ $ 11.56 17.31 20.16 37.42 52.43 67.46 5.91 11.61 $ $ $ $ $ $ $ $ $ 18.22 21.61 26.98 43.79 49.37 89.48 6.24 2.51 3.05 $ $ $ $ $ $ $ $ $ 14.69 18.56 23.86 44.99 52.95 65.19 0.32 2.25 $ $ $ $ $ $ $ $ $ 22.58 26.31 30.59 63.30 84.52 36.70 3.18 7.11 $ $ $ $ $ $ $ $ $ 67.05 83.79 101.58 189.50 239.26 258.82 12.15 6.01 12.41 $ $ $ $ $ $ $ $ $ $ 11.56 17.31 20.16 37.42 52.43 67.46 5.91 11.61 $ $ $ $ $ $ $ $ $ $ 1.82 2.37 1.16 4.29 6.43 6.61 $ 3.29 $ 1.16 $ 2.48 $ 4.42 $ 7.18 $ 13.56 $ $ 0.71 $ 0.15 $ 1.88 $ 1.05 $ 2.39 $ 6.72 $ 10.70 $ 5.09 $ $ 0.32 $ 0.32 $ 6.03 $ 1.22 $ 1.77 $ 5.90 $ 12.26 $ 3.40 $ $ $ 0.94 $ $ $ $ $ $ $ $ $ 13.02 5.80 7.80 21.33 36.57 28.66 1.03 1.40 $ $ $ $ $ $ $ $ $ $ 1.82 2.37 1.16 4.29 6.43 6.61 - -55% 35% 173% 71% -22% -100% N/A 36% 30% -51% 268% 50% 3% -100% N/A N/A N/A 25% 21% 87% 26% 8% -95% -51% 107% 50% 16% 86% 40% 29% -91% -100% N/A N/A Source: Commercial Real Estate Direct OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING PRODUCTION SERVICING RELEASES Page 46 Commercial Real Estate/Multifamily Finance Quarterly Data Book QUARTERLY COMMERCIAL MORTGAGE COMMITMENTS BY LIFE INSURANCE COMPANIES Billions of Dollars Q1 2011 $14 $12 $10 $8 $6 $4 $2 $$ 2001 Q1 2001 Q2 2001 Q3 2001 Q4 2002 Q1 2002 Q2 2002 Q3 2002 Q4 2003 Q1 2003 Q2 2003 Q3 2003 Q4 2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 Source: American Council of Life Insurance Companies (ACLI) a. Annual figures may not equal the sum of quarterly figures due to change in reporting. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING PRODUCTION SERVICING RELEASES Page 47 Commercial Real Estate/Multifamily Finance Quarterly Data Book QUARTERLY COMMERCIAL MORTGAGE COMMITMENTS BY LIFE INSURANCE COMPANIES Billions of Dollars Q1 2011 Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $ $ $ $ $ $ $ $ $ $ $ Q1 5.95 5.69 7.22 7.46 7.33 9.76 9.29 9.59 2.62 4.90 7.83 $ $ $ $ $ $ $ $ $ $ Q2 7.56 6.34 7.88 12.11 12.37 12.66 10.25 6.03 4.63 5.94 $ $ $ $ $ $ $ $ $ $ Q3 7.33 7.12 9.28 10.20 10.96 11.35 11.49 7.03 4.30 9.47 $ $ $ $ $ $ $ $ $ $ Q4 6.08 9.17 8.30 8.91 12.51 10.31 11.67 4.02 4.83 10.39 $ $ $ $ $ $ $ $ $ $ Annual (a) Percent Total change 26.92 28.32 32.68 38.67 43.17 44.08 42.69 26.67 16.39 30.71 $ $ $ $ $ $ $ $ $ $ $ YTD Q1 Percent Total change 5.95 5.69 7.22 7.46 7.33 9.76 9.29 9.59 2.62 4.90 7.83 5% 15% 18% 12% 2% -3% -38% -39% 87% -4% 27% 3% -2% 33% -5% 3% -73% 87% 60% Source: American Council of Life Insurance Companies (ACLI) a. Annual figures may not equal the sum of quarterly figures due to changes in reporting. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING PRODUCTION SERVICING RELEASES Page 48 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 4. Commercial/Multifamily Mortgage Debt Outstanding June 16, 2011 The level of commercial/multifamily mortgage debt outstanding remained essentially unchanged at $2.4 trillion in the first quarter of 2011, decreasing by 0.1 percent from fourth quarter 2010, according to the Mortgage Bankers Association’s (MBA) analysis of the Federal Reserve Board Flow of Funds data. MBA’s analysis was changed in the fourth quarter of 2010 to more accurately reflect the true level of mortgages backed by income-producing commercial and multifamily properties. The changes are detailed in Appendix A of the report. The $2.4 trillion in commercial/multifamily mortgage debt outstanding was $3 billion lower than the fourth quarter 2010 figure. Multifamily mortgage debt outstanding rose to $800 billion, an increase of $3 billion or 0.4 percent from the fourth quarter. “New commercial and multifamily mortgage lending offset the amount of debt paid-off and paid-down during the first quarter, Commercial Multifamily Mortgage Debt Outstanding By Investor Group, First Quarter 2011 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 49 Commercial Real Estate/Multifamily Finance Quarterly Data Book leaving the outstanding balance essentially unchanged,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Five of the seven largest investor groups increased their holdings of commercial and multifamily mortgages during the quarter. Banks and thrifts and finance companies saw declines in the balances of commercial and multifamily mortgages they hold.” The Federal Reserve Flow of Funds data summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under Life Insurance Companies) and in commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset backed securities (ABS) for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issuers). MBA recently improved its reporting of commercial and multifamily mortgage debt outstanding. The new reporting excludes two categories of loans that had formerly been included – loans for acquisition, development and construction and loans collateralized by owner-occupied commercial properties. By excluding these loan types, the analysis here more accurately reflects the balance of loans supported by office buildings, retail centers, apartment buildings and other incomeproducing properties that rely on rents and leases to make their payments. Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $794 billion, or 33 percent of the total. CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $626 billion, or 26 percent of the total. Agency and GSE portfolios and MBS hold $327 billion, or 14 percent of the total, and life insurance companies hold $299 billion, Q1 2011 or 13 percent of the total. Many life insurance companies, banks and the GSEs purchase and hold a large number of CMBS, CDO and other ABS issues. These loans appear in the CMBS, CDO and other ABS categories. MULTIFAMILY MORTGAGE DEBT OUTSTANDING Looking solely multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of multifamily mortgages, with $327 billion or 41 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $214 billion, or 27 percent of the total. CMBS, CDO and other ABS issuers hold $98 billion, or 12 percent of the total; state and local governments hold $75 billion, or 9 percent of the total; life insurance companies hold $47 billion, or 6 percent of the total; and the federal government holds $14 billion, or 2 percent of the total. CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING In the first quarter of 2011, commercial banks saw the largest decrease in dollar terms in their holdings of commercial/multifamily mortgage debt – a decrease of $8 billion or 1 percent. Finance companies decreased their holdings of commercial/multifamily mortgages by $3 billion or 4 percent. Agency and GSE portfolios and MBS; CMBS, CDO and other ABS issuers; life insurance companies; the Federal government; and state and local governments; all increased their holdings. In percentage terms, the household sector saw the largest decrease in their holdings of commercial/multifamily mortgages, a drop of 5 percent. Agency and GSE portfolios and MBS saw their holdings increase one percent. CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING The $3 billion increase in multifamily mortgage debt outstanding between the fourth quarter 2010 and first quarter 2011 represents a 0.4 percent increase. In dollar terms, agency and GSE portfolios and MBS OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 50 Commercial Real Estate/Multifamily Finance Quarterly Data Book saw the largest increase in their holdings of multifamily mortgage debt, an increase of $4 billion, or 1 percent. State and local government increased their holdings of multifamily mortgage debt by $805 million, or 1 percent. Life insurance companies increased by $140 million, or 0.3 percent. CMBS, CDO, and other ABS issues saw the biggest decrease in their holdings of multifamily mortgage debt, by $688 million or 0.7 percent. In percentage terms, agency and GSE portfolios and MBS recorded the biggest increase in their holdings of multifamily mortgages at 1 percent. Nonfinancial corporate business saw the biggest decrease at 40 percent. MBA’s analysis is based on data from the Federal Reserve Board’s Flow of Funds Account of the United States and the Federal Deposit Insurance Corporation’s Quarterly Banking Profile. More information on the construction of this data series is contained in Appendix A in the report. Q1 2011 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 51 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 COMMERCIAL AND MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Commercial and Multifamily Mortgage Debt Outstanding, by Quarter ($millions) 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 MF Commercial Source: MBA, Federal Reserve Board of Governors, and FDIC OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 52 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 QUARTERLY COMMERCIAL AND MULTIFAMILY MORTGAGE DEBT OUTSTANDING Commercial and Multifamily Mortgage Debt Outstanding, by Sector Mortgage Debt Outstanding 2011 Q1 ($millions) Bank and Thrift CMBS, CDO and other ABS issues Agency and GSE portfolios and MBS Life insurance companies State and local government Federal government Finance companies REITs Nonfarm noncorporate business Household sector Private pension funds Nonfinancial corporate business State and local government retirement funds Other insurance companies TOTAL 793,794 626,215 327,333 299,442 90,353 79,253 60,985 30,474 20,990 15,810 12,638 10,330 5,895 4,090 2,377,602 % of total 33.4% 26.3% 13.8% 12.6% 3.8% 3.3% 2.6% 1.3% 0.9% 0.7% 0.5% 0.4% 0.2% 0.2% 2010 Q4 ($millions) 802,248 622,541 323,376 298,556 89,527 78,433 63,611 30,626 21,064 16,720 12,837 10,815 6,031 4,139 2,380,524 % of total 33.7% 26.2% 13.6% 12.5% 3.8% 3.3% 2.7% 1.3% 0.9% 0.7% 0.5% 0.5% 0.3% 0.2% Change ($millions) -8,454 3,674 3,957 886 826 820 -2,626 -152 -74 -910 -199 -485 -136 -49 -2,922 Percent -1.1% 0.6% 1.2% 0.3% 0.9% 1.0% -4.1% -0.5% -0.4% -5.4% -1.6% -4.5% -2.3% -1.2% -0.1% Sector Share of $ Change 289.3% -125.7% -135.4% -30.3% -28.3% -28.1% 89.9% 5.2% 2.5% 31.1% 6.8% 16.6% 4.7% 1.7% Source: MBA, Federal Reserve Board of Governors, and FDIC Note: Beginning with the Q4 2010 release, MBA's analysis of mortgage debt outstanding more accurately reflects the true level of mortgages backed by income-producing commercial and multifamily properties. Previous releases do not incorporate these improvements. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 53 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 COMMERCIAL AND MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Commercial and Multifamily Mortgage Debt Outstanding, by Sector ($millions) B ank and Thrift CM B S, CDO and o ther A B S issues A gency and GSE po rtfo lio s and M B S Life insurance co mpanies State and lo cal go vernment Federal go vernment Finance co mpanies REITs No nfarm no nco rpo rate business Ho useho ld secto r P rivate pensio n funds No nfinancial co rpo rate business State and lo cal go vernment retirement funds Other insurance co mpanies 0 90,353 79,253 60,985 30,474 20,990 1 0 5,81 1 2,638 1 0,330 5,895 4,090 1 00,000 200,000 300,000 400,000 201 0Q4 500,000 201 Q1 1 600,000 700,000 327,333 299,442 626,21 5 793,794 800,000 900,000 Source: MBA, Federal Reserve Board of Governors, and FDIC OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 54 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 COMMERCIAL AND MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Commercial and Multifamily Mortgage Debt Outstanding, by Selected Sector by Quarter ($millions) 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 Agency and GSE portfolios and MBS CMBS, CDO and other ABS issues Source: MBA, Federal Reserve Board of Governors, and FDIC Bank and Thrift Life insurance companies OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 55 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 COMMERCIAL AND MULTIFAMILY MORTGAGE FLOWS Net Change in Commercial and Multifamily Mortgage Debt Outstanding, by Quarter ($millions) 100,000 80,000 60,000 40,000 20,000 0 (20,000) (40,000) 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 MF Commercial TOTAL Source: MBA, Federal Reserve Board of Governors, and FDIC OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 56 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 COMMERCIAL AND MULTIFAMILY MORTGAGE FLOWS Net Change in Commercial and Multifamily Mortgage Debt Outstanding, by Sector ($millions) A gency and GSE po rtfo lio s and M B S CM B S, CDO and o ther A B S issues Life insurance co mpanies State and lo cal go vernment Federal go vernment Other insurance co mpanies No nfarm no nco rpo rate business State and lo cal go vernment retirement funds REITs P rivate pensio n funds No nfinancial co rpo rate business Ho useho ld secto r Finance co mpanies B ank and Thrift (1 5,000) (8,454) (1 0,000) (5,000) 0 (2,626) (49) (74) (1 36) (1 52) (200) (485) (91 0) 886 826 820 3,957 3,674 5,000 1 0,000 2010Q4 Source: MBA, Federal Reserve Board of Governors, and FDIC 2011Q1 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 57 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 MULTIFAMILY MORTGAGE DEBT OUTSTANDING OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 58 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Multifamily Mortgage Debt Outstanding, by Quarter ($millions) 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 Source: MBA, Federal Reserve Board of Governors, and FDIC OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 59 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 QUARTERLY MULTIFAMILY MORTGAGE DEBT OUTSTANDING Multifamily Mortgage Debt Outstanding, by Sector Mortgage Debt Outstanding 2011 Q1 ($millions) Agency and GSE portfolios and MBS Bank and Thrift CMBS, CDO and other ABS issues State and local government Life insurance companies Federal government Nonfarm noncorporate business Finance companies Private pension funds State and local government retirement funds REITs Nonfinancial corporate business TOTAL 327,333 214,447 98,007 74,944 47,386 14,311 11,619 3,807 3,093 2,763 1,629 250 799,589 % of total 40.9% 26.8% 12.3% 9.4% 5.9% 1.8% 1.5% 0.5% 0.4% 0.3% 0.2% 0.0% 2010 Q4 ($millions) 323,376 214,741 98,695 74,139 47,246 14,364 11,660 4,081 3,144 2,827 1,711 416 796,400 % of total 40.6% 27.0% 12.4% 9.3% 5.9% 1.8% 1.5% 0.5% 0.4% 0.4% 0.2% 0.1% Change ($millions) 3,957 -294 -688 805 140 -53 -41 -274 -51 -64 -82 -166 3,189 Percent 1.2% -0.1% -0.7% 1.1% 0.3% -0.4% -0.4% -6.7% -1.6% -2.3% -4.8% -39.9% 0.4% Sector Share of $ Change 124.1% -9.2% -21.6% 25.2% 4.4% -1.7% -1.3% -8.6% -1.6% -2.0% -2.6% -5.2% Source: MBA, Federal Reserve Board of Governors, and FDIC Note: Beginning with the Q4 2010 release, MBA's analysis of mortgage debt outstanding more accurately reflects the true level of mortgages backed by income-producing commercial and multifamily properties. Previous releases do not incorporate these improvements. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 60 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Multifamily Mortgage Debt Outstanding, by Sector ($millions) A gency and GSE po rtfo lio s and M B S B ank and Thrift CM B S, CDO and o ther A B S issues State and lo cal go vernment Life insurance co mpanies Federal go vernment No nfarm no nco rpo rate business Finance co mpanies P rivate pensio n funds State and lo cal go vernment retirement funds REITs No nfinancial co rpo rate business 0 1 1 4,31 1 ,61 1 9 3,807 3,093 2,763 1 ,629 250 50,000 1 00,000 1 50,000 201 0Q4 200,000 201 Q1 1 250,000 300,000 47,386 98,007 74,944 21 4,447 327,333 350,000 Source: MBA, Federal Reserve Board of Governors, and FDIC OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 61 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 MULTIFAMILY MORTGAGE DEBT OUTSTANDING Total Multifamily Mortgage Debt Outstanding, by Selected Sector by Quarter ($millions) 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 1980Q1 1981Q1 1982Q1 1983Q1 1984Q1 1985Q1 1986Q1 1987Q1 1988Q1 1989Q1 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 Page 62 Agency and GSE portfolios and MBS CMBS, CDO and other ABS issues State and local government Source: MBA, Federal Reserve Board of Governors, and FDIC Bank and Thrift Life insurance companies OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 MULTIFAMILY MORTGAGE FLOWS Net Change in Multifamily Mortgage Debt Outstanding, by Quarter ($millions) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 (5,000) 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 Source: MBA. Federal Reserve Board of Governors, and FDIC OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 63 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 MULTIFAMILY MORTGAGE FLOWS Net Change in Multifamily Mortgage Debt Outstanding, by Sector ($millions) A gency and GSE po rtfo lio s and M B S State and lo cal go vernment Life insurance co mpanies No nfarm no nco rpo rate business P rivate pensio n funds Federal go vernment State and lo cal go vernment retirement funds REITs No nfinancial co rpo rate business Finance co mpanies B ank and Thrift CM B S, CDO and o ther A B S issues (6,000) (4,000) -41 -51 -53 -64 -82 -1 66 -274 -294 -688 (2,000) 0 2,000 201 0Q4 1 40 805 3,957 4,000 201 Q1 1 6,000 8,000 1 0,000 Source: MBA, Federal Reserve Board of Governors, and FDIC OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 64 Commercial Real Estate/Multifamily Finance Quarterly Data Book APPENDIX A MBA’s analysis is Federal Reserve Account of the Federal Deposit Quarterly Banking based on data from the Board’s Flow of Funds United States and the Insurance Corporation’s Profile Q1 2011 Estimated Components of Federal Reserve’s Flow of Funds “Commercial and Multifamily Mortgages” Held by Banks and Thrifts ($Billions) MBA’s analysis of commercial and multifamily mortgage debt outstanding was changed in the fourth quarter of 2010 to exclude two categories of loans that had previously been included; a. loans for acquisition, development and construction and b. loans collateralized by owneroccupied commercial properties. By excluding these loan types, MBA’s analysis more accurately reflects the balance of loans supported by office buildings, retail centers, apartment buildings and other income-producing properties that rely on rents and leases to make their payments. For the first quarter 2011, the Federal Reserve Board’s Flow of Funds Accounts data attributed $1.6 trillion of outstanding commercial and multifamily mortgages to banks and thrifts. Comparing this number to the FDIC’s Quarterly Banking Profile for the same period, one sees that banks and thrifts held $214.5 billion of multifamily mortgages and $1,064.5 billion of non-farm nonresidential mortgages, of which 54 percent or $579 billion were incomeproducing. The combined $794 billion of mortgages backed by multifamily and other income-producing properties is included in this analysis. The $1.6 trillion total reported by the Federal Reserve also includes $485 billion of loans collateralized by owneroccupied commercial properties and another $296 billion of loans backed by acquisition, development and construction projects (including those for single-family development), which are excluded in from this analysis. Multifamily mortgages, $214.5 Construction loans, $296 Incomeproducing commercial mortgages, $579 Owneroccupied commercial mortgages, $485 Source: MBA, Federal Reserve Board of Governors, and FDIC OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 65 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 Commercial/Multifamily Mortgage Delinquencies Commercial/Multifamily Mortgage Delinquency Rates Mixed in First Quarter June 8, 2011 Delinquency rates among different commercial/multifamily mortgage investor groups were mixed in the first quarter of 2011, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. The delinquency rate for loans held in CMBS reached the highest level since the series began in 1997, but the climb was slower than in recent quarters. Delinquency rates for other groups remain below levels seen in the last major real estate downturn during the early 1990’s, some by large margins. Between the fourth quarter of 2010 and first quarter of 2011, the 90+ day delinquency rate on loans held by FDIC-insured banks and thrifts remained the same at 4.18 percent. The 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) increased 0.23 percentage points to 9.18 percent. The 60+ day delinquency rate on loans held in life company portfolios decreased 0.05 percentage points to 0.14 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae decreased 0.07 percentage points to 0.64 percent. The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac increased 0.10 percentage points to 0.36 percent. The first quarter 2011 delinquency rate for commercial and multifamily mortgages held by banks and thrifts was 2.40 percentage points lower than the series high (6.58 percent reached in the second quarter of 1991). The rate for loans held in CMBS was a record high for the series. The delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.23 percentage points lower than the series high (7.37 percent reached during the fourth quarter of 1993); the rate for multifamily loans held by Fannie Mae was 2.98 percentage points below the series high (3.62 percent, reached during the fourth quarter of 1991); and the rate for multifamily loans held by Freddie Mac was 6.45 percentage points lower than the series high (6.81 percent reached in 1992). Please note: In March 2011, MBA released a DataNote covering the performance of commercial and multifamily mortgages at commercial banks and thrifts over the entire year 2010. The DataNote found that commercial and multifamily mortgages had the lowest charge-off rates of any major loan type and had delinquency rates lower than the overall book of loans and leases held by banks and thrifts. The DataNote can be found at: www.mortgagebankers.org/research Construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of ‘commercial real estate’ despite the fact that they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers or other income-producing properties. The FDIC delinquency rates for bank and thrift held mortgages reported here do include loans backed by owneroccupied commercial properties. The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together these groups hold OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 66 Commercial Real Estate/Multifamily Finance Quarterly Data Book more than 86 commercial/multifamily outstanding. percent mortgage of debt Q1 2011 The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another. Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the first quarter were as follows: • • • • • CMBS: 9.18 percent (30+ days delinquent or in REO); Life company portfolios: 0.14 percent (60+days delinquent); Fannie Mae: 0.64 percent (60 or more days delinquent) Freddie Mac: 0.36 percent (60 or more days delinquent); Banks and thrifts: 4.18 percent (90 or more days delinquent or in nonaccrual). Differences between the delinquency measures are detailed in Appendix A. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 67 Commercial Real Estate/Multifamily Finance Quarterly Data Book CHART 1. COMMERCIAL/MULTIFAMILY MORTGAGE DELINQUENCY RATES AMONG MAJOR INVESTOR GROUPS Q1 2011 Selected delinquency rates at the end of the period NOTE: Delinquency rates shown are NOT comparable between investor groups. These rates show how performance of loans for each investor groups has varied over time, but cannot be used to compare one investor group to another. 8.0% 7.0% Banks & Thrifts (90+ days) 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% CMBS (30+ days and REO) 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1990 -- Q1 1991 -- Q1 1992 -- Q1 1993 -- Q1 1994 -- Q1 1995 -- Q1 1996 -- Q1 1997 -- Q1 1998 -- Q1 1999 -- Q1 2000 -- Q1 2001 -- Q1 2002 -- Q1 2003 -- Q1 2004 -- Q1 2005 -- Q1 2006 -- Q1 2007 -- Q1 2008 -- Q1 2009 -- Q1 2010 -- Q1 2011 -- Q1 2.0% 1.0% 0.0% 1990 -- Q1 1991 -- Q1 1992 -- Q1 1993 -- Q1 1994 -- Q1 1995 -- Q1 1996 -- Q1 1997 -- Q1 1998 -- Q1 1999 -- Q1 2000 -- Q1 2001 -- Q1 2002 -- Q1 2003 -- Q1 2004 -- Q1 2005 -- Q1 2006 -- Q1 2007 -- Q1 2008 -- Q1 2009 -- Q1 2010 -- Q1 2011 -- Q1 8.0% 7.0% 7 0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1990 -- Q1 1991 -- Q1 1992 -- Q1 1993 -- Q1 1994 -- Q1 1995 -- Q1 1996 -- Q1 1997 -- Q1 1998 -- Q1 1999 -- Q1 2000 -- Q1 2001 -- Q1 2002 -- Q1 2003 -- Q1 2004 -- Q1 2005 -- Q1 2006 -- Q1 2007 -- Q1 2008 -- Q1 2009 -- Q1 2010 -- Q1 2011 -- Q1 1990 -- Q1 1991 -- Q1 1992 -- Q1 1993 -- Q1 1994 -- Q1 1995 -- Q1 1996 -- Q1 1997 -- Q1 1998 -- Q1 1999 -- Q1 2000 -- Q1 2001 -- Q1 2002 -- Q1 2003 -- Q1 2004 -- Q1 2005 -- Q1 2006 -- Q1 2007 -- Q1 2008 -- Q1 2009 -- Q1 2010 -- Q1 2011 -- Q1 Fannie Mae* (60+ days) Freddie Mac^ (60+ days) 8.0% Life Companies (60+ days) 7 0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Sources: Wachovia Capital Markets, LLC and Intex Solutions, Inc., American Council of Life Insurers, Fannie Mae, Freddie Mac, OFHEO and Federal Deposit Insurance Corporation OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 68 Commercial Real Estate/Multifamily Finance Quarterly Data Book CHART 2. COMMERCIAL/MULTIFAMILY MORTGAGE DELINQUENCY RATES AMONG MAJOR INVESTOR GROUPS, 2000 - PRESENT Q1 2011 Selected delinquency rates at the end of the period NOTE: Delinquency rates shown are NOT comparable between investor groups. These rates show how performance of loans for each investor groups has varied over time, but cannot be used to compare one investor group to another. 5.0% 10.0% 9.0% 4.0% Banks & Thrifts (90+ days) 8.0% 7.0% CMBS (30+ days and REO) 3.0% 6.0% 5.0% 2.0% 4.0% 3.0% 1.0% 2.0% 1.0% 0.0% 2000 -- Q1 2001 -- Q1 2002 -- Q1 2003 -- Q1 2004 -- Q1 2005 -- Q1 2006 -- Q1 2007 -- Q1 2008 -- Q1 2009 -- Q1 2010 -- Q1 2011 -- Q1 0.0% 2000 -- Q1 2001 -- Q1 2002 -- Q1 2003 -- Q1 2004 -- Q1 2005 -- Q1 2006 -- Q1 2007 -- Q1 2008 -- Q1 2009 -- Q1 2010 -- Q1 2010 -- Q1 2011 -- Q1 2011 -- Q1 1.0% Life Companies (60+ days) 1.0% Fannie Mae* (60+ days) Freddie Mac^ (60+ days) 0.8% 0.8% 0.6% 0.6% 0.4% 0.4% 0.2% 0.2% 0.0% 2000 -- Q1 2001 -- Q1 2002 -- Q1 2003 -- Q1 2004 -- Q1 2005 -- Q1 2006 -- Q1 2007 -- Q1 2008 -- Q1 2009 -- Q1 2010 -- Q1 2011 -- Q1 0.0% 2000 -- Q1 2001 -- Q1 2002 -- Q1 2003 -- Q1 2004 -- Q1 2005 -- Q1 2006 -- Q1 2007 -- Q1 2008 -- Q1 2009 -- Q1 Sources: Wachovia Capital Markets, LLC and Intex Solutions, Inc., American Council of Life Insurers, Fannie Mae, Freddie Mac, OFHEO and Federal Deposit Insurance Corporation OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 69 Commercial Real Estate/Multifamily Finance Quarterly Data Book COMMERCIAL/MULTIFAMILY MORTGAGE DELINQUENCY RATES AMONG MAJOR INVESTOR GROUPS Selected delinquency rates at the end of the period Q1 2011 NOTE: Delinquency rates shown are NOT comparable between investor groups. These rates show how performance of loans for each investor groups has varied over time, but cannot be used to compare one investor group to another. Life Companies Fannie Mae Freddie Mac (60+ days) (60+ days) (60+days) CMBS (30+ days and REO) Banks & Thrifts (90+ days) Year-end 1996 -- Q4 1997 -- Q4 1998 -- Q4 1999 -- Q4 2000 -- Q4 2001 -- Q4 2002 -- Q4 2003 -- Q4 2004 -- Q4 2005 -- Q4 2006 -- Q4 2007 -- Q4 2008 -- Q4 2009 -- Q4 2010 -- Q4 Quarter-end 2008 -- Q1 2008 -- Q2 2008 -- Q3 2008 -- Q4 2009 -- Q1 2009 -- Q2 2009 -- Q3 2009 -- Q4 2010 -- Q1 2010 -- Q2 2010 -- Q3 2010 -- Q4 2011 -- Q1 n.a. 0.39% 0.54% 0.51% 0.81% 1.26% 1.47% 1.72% 1.29% 0.84% 0.41% 0.39% 1.17% 5.70% 8.95% 0.48% 0.53% 0.63% 1.17% 1.86% 3.91% 4.08% 5.70% 6.83% 8.24% 8.59% 8.95% 9.18% 1.79% 0.90% 0.48% 0.25% 0.28% 0.12% 0.28% 0.12% 0.08% 0.05% 0.02% 0.01% 0.07% 0.19% 0.19% 0.01% 0.03% 0.06% 0.07% 0.12% 0.15% 0.23% 0.19% 0.31% 0.29% 0.22% 0.19% 0.14% 0.68% 0.37% 0.29% 0.12% 0.04% 0.33% 0.13% 0.13% 0.10% 0.27% 0.08% 0.08% 0.30% 0.63% 0.71% 0.09% 0.11% 0.16% 0.30% 0.34% 0.51% 0.62% 0.63% 0.79% 0.80% 0.65% 0.71% 0.64% 1.96% 0.96% 0.37% 0.14% 0.04% 0.15% 0.13% 0.05% 0.06% 0.00% 0.05% 0.02% 0.01% 0.20% 0.26% 0.04% 0.04% 0.05% 0.08% 0.12% 0.15% 0.15% 0.20% 0.22% 0.22% 0.31% 0.26% 0.36% 1.63% 1.19% 0.93% 0.71% 0.67% 0.90% 0.86% 0.78% 0.61% 0.53% 0.59% 0.85% 1.66% 3.94% 4.18% 1.05% 1.22% 1.39% 1.66% 2.29% 2.95% 3.46% 3.94% 4.27% 4.34% 4.41% 4.18% 4.18% Sources: Wachovia Capital Markets, LLC and Intex Solutions, Inc., American Council of Life Insurers, Fannie Mae, Freddie Mac, OFHEO and Federal Deposit Insurance Corporation. Note: Differences between the delinquency measures are detailed in Appendix A. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 70 Commercial Real Estate/Multifamily Finance Quarterly Data Book APPENDIX A SOURCES & MEASURES OF DELINQUENCIES Commercial Mortgage-backed Securities (CMBS) Source: Wachovia Capital Markets, LLC and Intex Solutions, Inc. The delinquency rate for CMBS loans covers loans 30+ days delinquent, including those in foreclosure, and real estate owned (REO). The CMBS rate is the only one to include REO in either the numerator or the denominator. This series includes all private-label (non-Ginnie Mae, Fannie Mae or Freddie Mac issued) deals that are currently outstanding, including both fixedand floating-rate deals. Life Companies Source: American Council of Life Insurers The delinquency rate for life insurance company loans covers loans 60+ days delinquent, including those in foreclosure, and does not include real estate owned (REO) in either the numerator or the denominator. Fannie Mae Source: Fannie Mae Monthly Volume Summary and Office of Federal Housing Enterprise Oversight Annual Reports to Congress The delinquency rate for multifamily loans either held in portfolio or securitized and guaranteed by the company covers loans 60+ days delinquent, including those in foreclosure, and does not include real estate owned (REO) in either the numerator or the denominator. The company was unable to provide December delinquency figures for the years 2000 to 2004, so the fourth quarter numbers presented for those years are November, rather December, figures. In January 2011, we revised our 2010 monthly multifamily delinquency rates for all periods presented to exclude multifamily borrowers who have entered into a forbearance agreement and are abiding by the terms of the agreement, but had been previously included in our multifamily delinquency rates due to an error. Q1 2011 Freddie Mac Source: Freddie Mac Monthly Volume Summary and Office of Federal Housing Enterprise Oversight Annual Reports to Congress The delinquency rate for multifamily loans either held in portfolio or securitized and guaranteed by the company covers loans 60+ days delinquent, including those in foreclosure, and does not include real estate owned (REO) in either the numerator or the denominator. Freddie Mac notes that their delinquency rate “[e]xcludes mortgage loans whose original contractual terms have been modified under an agreement with the borrower as long as the borrower complies with the modified contractual terms.” As an example, after Hurricane Katrina, Freddie Mac modified a number of loans affected by the storms. In May 2010, Freddie Mac returned to reporting multifamily delinquencies as those loans 60+ days delinquent. FDIC-insured Banks & Thrifts Source: Federal Deposit Insurance Corporation The delinquency rate for FDIC banks and thrifts covers loans 90+ days delinquent, including those in foreclosure and in nonaccrual status, and does not include real estate owned (REO) in either the numerator or the denominator. The universe of loans covered by this series also includes a large number of “owner-occupied” commercial loans – loans supported by the income of the resident business rather than by rent and lease payments. In a 2007 analysis by MBA of the ten banks with the largest commercial mortgage portfolios, approximately half, in dollar volume, of their commercial (non-multifamily) loan portfolio was comprised of these “owneroccupied” properties. Data are available for life companies, FDICinsured banks and thirfts, Fannie Mae and Freddie Mac since 1990 and CMBS since 1997. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 71 Commercial Real Estate/Multifamily Finance Quarterly Data Book COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) OUTSTANDING Q1 2011 Billions of Dollars Annual Percent Total change Q4-to-Q1 Change Percent Total change Year Q1 Q2 Q3 Q4 U.S. CMBS OUTSTANDING 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 64.37 136.53 178.27 210.05 255.08 284.26 334.72 395.26 506.17 661.99 817.69 779.84 728.32 652.67 $ $ $ $ $ $ $ $ $ $ $ $ $ 86.50 149.37 183.45 222.22 263.82 300.44 352.06 418.40 546.51 724.27 811.70 766.98 711.64 $ $ $ $ $ $ $ $ $ $ $ $ $ 103.14 160.70 192.24 238.55 271.77 313.48 369.77 454.41 582.53 804.95 799.98 753.09 693.03 $ $ $ $ $ $ $ $ $ $ $ $ $ 126.09 172.78 200.77 245.70 279.81 326.40 383.30 484.79 631.98 820.95 788.90 740.77 672.11 $ $ $ $ $ $ $ $ $ $ $ $ $ 72.17 41.73 31.79 45.03 29.17 50.47 60.54 110.91 155.81 155.70 (37.85) (51.51) (75.65) 112% 31% 18% 21% 11% 18% 18% 28% 31% 24% -5% -7% -10% $ $ $ $ $ $ $ $ $ $ $ $ $ 10.45 5.48 9.28 9.38 4.45 8.32 11.96 21.38 30.01 (3.26) (9.07) (12.45) (19.43) 7.7% 3.1% 4.4% 3.7% 1.6% 2.5% 3.0% 4.2% 4.5% -0.4% -1.2% -1.7% -3.0% Source: Wachovia Capital Markets, LLC, and Intex Solutions, Inc. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 72 Commercial Real Estate/Multifamily Finance Quarterly Data Book COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) OUTSTANDING Q1 2011 Billions of Dollars $900 $800 $700 $600 $500 $400 $300 $200 $100 $1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Wachovia Capital Markets, LLC, and Intex Solutions, Inc. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 73 Commercial Real Estate/Multifamily Finance Quarterly Data Book COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) MARKET COMPOSITION Composition of CMBS Outstanding, as of March 30, 2011 Q1 2011 Total CMBS Outstanding By Property Types: Office Multifamily Retail Industrial Hotel Self-Storage Healthcare Other $ 652.7 billion SelfStorage, 1.8% Hotel, 9.6% Industrial, 5.1% Healthcare, 0.6% Other, 6.1% Office, 31.5% 31.5% 15.2% 30.0% 5.1% 9.6% 1.8% 0.6% 6.1% Retail, 30.0% By Amortization: Fully Amortizing All Interest-Only (IO) Full Term IO Part Term IO Multifamily, 15.2% 35.5% 64.5% 34.1% 30.3% Fully Amortizing, 35.5% Part Term IO, 30.3% By Percent Defeased 5.3% By Delinquency: Current 30-day delinquent 60-day delinquent 90+day delinquent Foreclosure/REO 90.82% 0.82% 0.52% 3.80% 4.04% Full Term IO, 34.1% Source: Wachovia Capital Markets, LLC, and Intex Solutions, Inc. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 74 Commercial Real Estate/Multifamily Finance Quarterly Data Book CMBS SPREADS COMMERCIAL MORTGAGE BACKED SECURITIES (CMBS) SPREADS TO SWAP RATES (in Basis Points) 16000 14000 12000 10000 8000 6000 4000 2000 0 Q1 2011 Source: Commercial Real Estate Direct AAA CMBS SPREADS (in Basis Points) 1400 1200 1000 800 600 400 200 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Commercial Mortgage Alert Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Mar-11 Apr-11 May-11 Super Senior AAA Junior AAA AA A BBB BBB- OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 75 Commercial Real Estate/Multifamily Finance Quarterly Data Book CMBS SPREADS Commercial Mortgage Backed Securities (CMBS) Spreads to Swap Rates Q1 2011 (in Basis Points) Super Senior AAA 31-Dec-04 30-Dec-05 29-Dec-06 28-Dec-07 26-Dec-08 25-Dec-09 31-Dec-10 28-May-10 25-Jun-10 30-Jul-10 27-Aug-10 24-Sep-10 29-Oct-10 26-Nov-10 31-Dec-10 28-Jan-11 25-Feb-11 25-Mar-11 29-Apr-11 27-May-11 Change in Spread May-10 to May-11 25 28 23 85 893 563 243 395 375 343 328 310 300 280 243 208 185 209 146 172 Junior AAA 28 38 30 184 2963 2030 775 1577 1650 1565 1500 1250 1095 970 775 555 468 625 520 618 AA 33 48 38 260 4013 3545 2710 3500 3500 3500 3500 3175 3005 2880 2710 2003 1305 1190 1275 1223 A 41 59 47 390 4775 4845 3450 4500 4500 4500 4500 4425 4163 3990 3450 3043 1865 2003 2165 2058 BBB 80 120 75 763 7170 6500 9685 7372 7308 7029 10000 8300 8150 8150 9685 7155 4700 4345 5000 4108 BBB120 183 92 938 7915 7000 10000 9000 9000 9000 10000 9500 9250 9250 10000 14750 7025 6250 7120 5215 -224 -960 -2278 -2443 -3265 -3785 Source: Commercial Real Estate Direct OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING OUTSTANDING SERVICING RELEASES Page 76 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 5. Commercial/Multifamily Mortgage Servicing Volumes Year-End 2010 The Mortgage Bankers Association (MBA) today released its year-end ranking of commercial and multifamily mortgage servicers as of the end of December 31, 2010. On top of the list of firms is Wells Fargo with $451.1 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $337.4 billion, Berkadia Commercial Mortgage with $194.9 billion, Bank of America Merrill Lynch with $126.6 billion, and KeyBank Real Estate Capital with $118.9 billion. Specific breakouts include: • Total U.S. Master and Primary Servicing Volume • U.S. Commercial Mortgage-backed Securities (CMBS), Collateralized Debt Obligations (CDOs) and Other Asset-Backed Securities (ABS) Master and Primary Servicing Volume • U.S. Commercial Banks and Savings Institution Volume • U.S. Credit Company, Pension Funds, REITs, and Investment Funds Volume • Fannie Mae and Freddie Mac Servicing Volume • Federal Housing Administration (FHA) Servicing Volume • U.S. Life Company Servicing Volume • U.S. Warehouse Volume • U.S. Other Investor Volume • U.S. CMBS Named Special Servicing Volume • Total Non-U.S. Master and Primary Servicing Volume A primary servicer is generally responsible for collecting loan payments from borrowers, performing property inspections and other property-related activities. A master servicer is typically responsible for collecting cash and data from primary servicers and then providing that cash and data, through trustees, to investors. Unless otherwise noted, MBA tabulations that combine different roles do not double-count loans for which a single servicer performs multiple roles. Wells Fargo, PNC/Midland, Berkadia, Bank of America Merrill Lynch and KeyBank are the largest master and primary servicers of commercial/multifamily loans in U.S. CMBS, CDO and other ABS; , PNC/Midland, GEMSA Loan Services, Prudential Asset Resources, Northwestern Mutual, and Northmarq Capital are the largest servicers for life companies; PNC/Midland, Wells Fargo, Berkadia, Deutsche Bank Commercial Real Estate and Prudential Asset Resources are the largest Fannie Mae/Freddie Mac servicers. PNC/Midland ranks as the top master and primary servicer of commercial bank and savings institution loans; GEMSA the top credit company, pension funds, REITs, and investment funds servicer; PNC/Midland the top FHA and Ginnie Mae servicer; Wells Fargo the top for mortgages in warehouse facilities; and Berkadia the top for other investor type loans. MBA also asked firms to provide information about CMBS loans on which they are the "named special servicer" – that is, where the firm stands ready to service the loan should special problems develop, such as delinquency. The leading named special servicers were LNR Partners, Inc., CWCapital LLC & CWCapital Asset Management, C-III Asset Management LLC, PNC/Midland, and Berkadia. The MBA survey also collected servicing volumes for loans on commercial/multifamily properties located OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 77 Commercial Real Estate/Multifamily Finance Quarterly Data Book outside the United States. Hatfield Philips International, an LNR Property Company ranks as the largest master and primary servicer of non-U.S. commercial/multifamily mortgages, followed by, Deutsche Bank, PNC/Midland, GEMSA, and Manulife Financial/John Hancock. Q1 2011 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 78 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing TOTAL Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Company Wells Fargo PNC Real Estate / Midland Loan Services Berkadia Commercial Mortgage LLC Bank of America Merrill Lynch KeyBank Real Estate Capital GEMSA Loan Services LP Prudential Asset Resources Deutsche Bank Commercial Real Estate NorthMarq Capital TriMont Real Estate Advisors Principal Global Investors HFF L. P. Grandbridge Real Estate Capital, LLC Northwestern Mutual C-III Asset Management LLC Manulife Financial / John Hancock New York Life Investments Q10 Capital LLC Walker & Dunlop, LLC Red Mortgage Capital, LLC HSBC Bank USA, N.A. CWCapital LLC & CWCapital Asset Management AEGON USA Reality Advisors, LLC Nationwide Life Insurance Company ING Investment Management, LLC Greystone Servicing Corporation, Inc. M&T Realty Capital Corporation Situs Serv LP DBA Situs Asset Management LLC Pacific Life Insurance Company Thrivent Financial for Lutherans Oak Grove Capital The Lincoln National Life Insurance Company NCB, FSB Newmark Realty Capital, Inc. - SAM Member Cohen Financial Essex Financial Services, LLC Pacific Southwest Realty Services - SAM Member The Bank of New York Mellon - Asset Solutions Division Columbia National Real Estate Finance, LLC Bellwether Real Estate Capital LLC AmeriSphere Multifamily Finance, LLC RiverSource Life Insurance Company Heartland Bank Amount ($ millions) $451,089 $337,367 $194,930 $126,627 $118,882 $102,312 $65,073 $52,263 $38,552 $28,385 $25,058 $25,050 $24,268 $21,494 $19,363 $16,087 $15,816 $14,870 $14,653 $13,539 $12,763 $12,665 $11,889 $9,887 $9,011 $8,768 $8,737 $8,348 $8,298 $8,266 $7,470 $7,228 $6,773 $5,802 $5,305 $4,972 $4,199 $4,189 $4,042 $3,869 $3,568 $2,620 $2,506 $2,494 Number of loans 39,125 79,720 26,119 10,789 11,462 11,036 5,794 2,597 5,470 1,365 2,908 2,018 5,076 625 1,976 1,510 596 4,831 1,680 1,512 1,831 1,268 1,490 1,447 1,228 1,371 2,270 1,018 3,554 518 3,300 1,219 1,258 4,328 757 2,472 1,034 800 717 369 862 300 818 603 Avg. Loan Size ($m) $11.5 $4.2 $7.5 $11.7 $10.4 $9.3 $11.2 $20.1 $7.0 $20.8 $8.6 $12.4 $4.8 $34.4 $9.8 $10.7 $26.5 $3.1 $8.7 $9.0 $7.0 $10.0 $8.0 $6.8 $7.3 $6.4 $3.8 $8.2 $2.3 $16.0 $2.3 $5.9 $5.4 $1.3 $7.0 $2.0 $4.1 $5.2 $5.6 $10.5 $4.1 $8.7 $3.1 $4.1 26 Centerline Capital Group OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 79 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing TOTAL Q1 2011 Rank 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 Company Barry S. Slatt Mortgage Company P/R Mortgage & Investment Corp. 4086 Mortgage Capital, Inc. Primary Capital Advisors Capital Funding, LLC (formerly Capital Funding Group, Inc.) Bernard Financial Servicing Group - SAM Member Norris, Beggs & Simpson Dougherty Funding LLC OneAmerica Financial Partners Lancaster Pollard Mortgage Company Sunrise Mortgage & Investment Co. HomeStreet Capital Colliers Meredith & Grew - SAM Member Waterstone Asset Management Johnson Capital Group Medalist Capital Capital Advisors, Inc. Gershman Mortgage Glacier Real Estate Finance RockBridge Capital LLC Protective Life Corp Thomas D. Wood and Company - SAM Member Goedecke & Co., LLC Morris, Smith and Feyh, Incorporated Allianz Real Estate of America Westcap Corp. George Elkins Mortgage Banking Company Pace Financial Group Dougherty Mortgage LLC Venture Mortgage Corporation Century Health Capital, Inc. Litton Loan Servicing Dickinson, Logan, Todd & Barber, Inc. - SAM Member Terrix Financial Corporation Summit Investment Partners Innovative Capital Advisors, LLC Eustis Commercial Mortgage Corporation - SAM Member Western Capital Realty Advisors - SAM Member Metropolitan Funding Corp. First Housing Development Corporation of Florida Directed Capital Great-West Life & Anuity Insurance Company Boston Mutual Life Insurance Company Ziegler Financing Corporation Amount ($ millions) $2,077 $2,042 $2,004 $1,937 $1,892 $1,719 $1,649 $1,583 $1,542 $1,526 $1,378 $1,350 $1,200 $1,150 $1,138 $1,115 $1,102 $1,042 $1,035 $1,034 $935 $845 $817 $811 $770 $769 $763 $699 $598 $584 $558 $492 $438 $368 $354 $284 $280 $256 $253 $246 $188 $147 $133 $107 Number of loans 905 491 441 154 287 264 357 123 551 356 937 360 99 177 158 253 306 153 297 92 295 404 132 166 26 187 419 70 77 236 60 1,525 126 243 298 225 73 51 3 63 153 44 153 10 Avg. Loan Size ($m) $2.3 $4.2 $4.5 $12.6 $6.6 $6.5 $4.6 $12.9 $2.8 $4.3 $1.5 $3.7 $12.1 $6.5 $7.2 $4.4 $3.6 $6.8 $3.5 $11.2 $3.2 $2.1 $6.2 $4.9 $29.6 $4.1 $1.8 $10.0 $7.8 $2.5 $9.3 $0.3 $3.5 $1.5 $1.2 $1.3 $3.8 $5.0 $84.4 $3.9 $1.2 $3.3 $0.9 $10.7 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 80 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing TOTAL Q1 2011 Rank 89 90 91 92 93 Company Welsh Capital, LLC - SAM Member Resurgent Capital Services Allstate Investments, LLC Bridgelock Capital DBA (BLC SERVICING) Minnesota Life Insurance Company Amount ($ millions) $42 $38 $23 $4 $4 Number of loans 34 481 11 5 6 Avg. Loan Size ($m) $1.2 $0.1 $2.1 $0.8 $0.7 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 81 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing CMBS, CDO or other ABS Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Company Wells Fargo PNC Real Estate / Midland Loan Services Berkadia Commercial Mortgage LLC Bank of America Merrill Lynch KeyBank Real Estate Capital GEMSA Loan Services LP Principal Global Investors Prudential Asset Resources HFF L. P. NorthMarq Capital Grandbridge Real Estate Capital, LLC The Bank of New York Mellon - Asset Solutions Division CWCapital LLC & CWCapital Asset Management NCB, FSB Deutsche Bank Commercial Real Estate Situs Serv LP DBA Situs Asset Management LLC Nationwide Life Insurance Company C-III Asset Management LLC Pacific Life Insurance Company Q10 Capital LLC Bernard Financial Servicing Group - SAM Member Waterstone Asset Management Newmark Realty Capital, Inc. - SAM Member Pacific Southwest Realty Services - SAM Member Protective Life Corp Manulife Financial / John Hancock Cohen Financial Columbia National Real Estate Finance, LLC AEGON USA Reality Advisors, LLC TriMont Real Estate Advisors Walker & Dunlop, LLC Litton Loan Servicing Summit Investment Partners Pace Financial Group New York Life Investments Johnson Capital Group Goedecke & Co., LLC Bellwether Real Estate Capital LLC Venture Mortgage Corporation George Elkins Mortgage Banking Company Morris, Smith and Feyh, Incorporated Western Capital Realty Advisors - SAM Member Glacier Real Estate Finance Primary Capital Advisors Amount ($ millions) $368,024 $128,923 $113,473 $90,354 $82,439 $16,483 $12,863 $11,848 $7,827 $6,962 $4,486 $4,042 $3,841 $2,709 $2,189 $2,109 $1,994 $1,851 $1,740 $1,175 $1,168 $1,113 $1,053 $1,038 $935 $863 $812 $804 $498 $404 $392 $389 $354 $263 $191 $177 $172 $128 $99 $99 $64 $64 $59 $42 Number of loans 28,733 12,234 14,190 4,940 8,423 3,612 1,537 1,180 564 805 774 717 400 1,221 164 267 220 113 299 138 108 135 78 128 295 121 275 80 14 5 32 1,164 298 34 1 25 18 13 21 5 12 13 12 4 Avg. Loan Size ($m) $12.8 $10.5 $8.0 $18.3 $9.8 $4.6 $8.4 $10.0 $13.9 $8.6 $5.8 $5.6 $9.6 $2.2 $13.3 $7.9 $9.1 $16.4 $5.8 $8.5 $10.8 $8.2 $13.5 $8.1 $3.2 $7.1 $3.0 $10.0 $35.6 $80.7 $12.3 $0.3 $1.2 $7.7 $191.0 $7.1 $9.6 $9.8 $4.7 $19.8 $5.3 $4.9 $5.0 $10.5 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 82 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing CMBS, CDO or other ABS Q1 2011 Rank 45 46 47 48 49 Company HSBC Bank USA, N.A. Norris, Beggs & Simpson Eustis Commercial Mortgage Corporation - SAM Member Colliers Meredith & Grew - SAM Member Welsh Capital, LLC - SAM Member Amount ($ millions) $39 $23 $14 $14 $7 Number of loans 2 3 2 4 2 Avg. Loan Size ($m) $19.3 $7.6 $7.0 $3.5 $3.3 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 83 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing Commercial Bank/Savings Institution Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Company PNC Real Estate / Midland Loan Services TriMont Real Estate Advisors KeyBank Real Estate Capital Deutsche Bank Commercial Real Estate HSBC Bank USA, N.A. Berkadia Commercial Mortgage LLC Bank of America Merrill Lynch Situs Serv LP DBA Situs Asset Management LLC Dougherty Funding LLC HFF L. P. NCB, FSB Principal Global Investors HomeStreet Capital Columbia National Real Estate Finance, LLC Grandbridge Real Estate Capital, LLC Wells Fargo RockBridge Capital LLC P/R Mortgage & Investment Corp. GEMSA Loan Services LP Heartland Bank Waterstone Asset Management Q10 Capital LLC Pacific Southwest Realty Services - SAM Member George Elkins Mortgage Banking Company Primary Capital Advisors Centerline Capital Group Amount ($ millions) $54,048 $26,065 $24,141 $21,020 $9,451 $3,166 $2,663 $2,099 $1,583 $884 $702 $549 $500 $498 $261 $194 $145 $129 $126 $50 $37 $7 $3 $1 $1 $0 Number of loans 55,996 898 2,093 266 1,500 233 3,200 2,207 123 19 2,043 95 101 82 48 19 10 55 21 13 42 4 2 1 1 2 Avg. Loan Size ($m) $1.0 $29.0 $11.5 $79.0 $6.3 $13.6 $0.8 $1.0 $12.9 $46.5 $0.3 $5.8 $5.0 $6.1 $5.4 $10.1 $14.5 $2.3 $6.0 $3.8 $0.9 $1.8 $1.5 $1.3 $1.0 $0.2 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 84 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing Credit Company, Pension Funds, REITs, Investment Funds Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Company GEMSA Loan Services LP PNC Real Estate / Midland Loan Services C-III Asset Management LLC Prudential Asset Resources Situs Serv LP DBA Situs Asset Management LLC Cohen Financial NorthMarq Capital CWCapital LLC & CWCapital Asset Management TriMont Real Estate Advisors HFF L. P. Wells Fargo Principal Global Investors New York Life Investments Q10 Capital LLC Directed Capital Columbia National Real Estate Finance, LLC KeyBank Real Estate Capital Resurgent Capital Services George Elkins Mortgage Banking Company Amount ($ millions) $38,491 $11,861 $8,945 $3,928 $2,578 $1,900 $1,494 $904 $740 $510 $374 $359 $279 $255 $188 $171 $56 $3 $1 Number of loans 4,276 718 530 551 630 1,710 110 32 440 80 153 21 5 73 153 9 45 14 1 Avg. Loan Size ($m) $9.0 $16.5 $16.9 $7.1 $4.1 $1.1 $13.6 $28.3 $1.7 $6.4 $2.5 $17.1 $55.8 $3.5 $1.2 $19.0 $1.2 $0.2 $0.8 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 85 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing Fannie Mae & Freddie Mac Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Company PNC Real Estate / Midland Loan Services Wells Fargo Berkadia Commercial Mortgage LLC Deutsche Bank Commercial Real Estate Prudential Asset Resources GEMSA Loan Services LP Walker & Dunlop, LLC NorthMarq Capital Red Mortgage Capital, LLC C-III Asset Management LLC Centerline Capital Group Grandbridge Real Estate Capital, LLC M&T Realty Capital Corporation Greystone Servicing Corporation, Inc. Oak Grove Capital CWCapital LLC & CWCapital Asset Management KeyBank Real Estate Capital HSBC Bank USA, N.A. HFF L. P. NCB, FSB AmeriSphere Multifamily Finance, LLC Primary Capital Advisors Columbia National Real Estate Finance, LLC HomeStreet Capital Bank of America Merrill Lynch P/R Mortgage & Investment Corp. Q10 Capital LLC Cohen Financial Bellwether Real Estate Capital LLC Dougherty Mortgage LLC Bernard Financial Servicing Group - SAM Member Principal Global Investors Lancaster Pollard Mortgage Company Eustis Commercial Mortgage Corporation - SAM Member The Lincoln National Life Insurance Company Manulife Financial / John Hancock TriMont Real Estate Advisors Amount ($ millions) $57,467 $46,632 $26,839 $26,429 $14,386 $13,954 $11,928 $11,157 $10,622 $8,492 $8,464 $8,168 $7,685 $6,818 $5,943 $5,508 $5,217 $3,273 $3,198 $2,371 $2,360 $1,894 $808 $791 $723 $264 $168 $147 $110 $108 $65 $57 $24 $20 $8 $1 $0 Number of loans 6,067 7,808 2,633 2,030 1,022 951 1,374 1,458 956 1,314 1,311 918 934 2,057 1,014 471 494 329 184 1,056 276 149 62 236 304 56 23 25 7 17 7 52 3 7 5 1 1 Avg. Loan Size ($m) $9.5 $6.0 $10.2 $13.0 $14.1 $14.7 $8.7 $7.7 $11.1 $6.5 $6.5 $8.9 $8.2 $3.3 $5.9 $11.7 $10.6 $9.9 $17.4 $2.2 $8.6 $12.7 $13.0 $3.4 $2.4 $4.7 $7.3 $5.9 $15.7 $6.4 $9.3 $1.1 $8.1 $2.9 $1.5 $1.0 $0.2 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 86 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing FHA & Ginnie Mae Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Company PNC Real Estate / Midland Loan Services Berkadia Commercial Mortgage LLC Prudential Asset Resources Wells Fargo Red Mortgage Capital, LLC Heartland Bank CWCapital LLC & CWCapital Asset Management KeyBank Real Estate Capital Capital Funding, LLC (formerly Capital Funding Group, Inc.) P/R Mortgage & Investment Corp. Lancaster Pollard Mortgage Company Deutsche Bank Commercial Real Estate Oak Grove Capital Gershman Mortgage Greystone Servicing Corporation, Inc. Walker & Dunlop, LLC M&T Realty Capital Corporation Century Health Capital, Inc. Dougherty Mortgage LLC Grandbridge Real Estate Capital, LLC NorthMarq Capital AmeriSphere Multifamily Finance, LLC Metropolitan Funding Corp. First Housing Development Corporation of Florida Centerline Capital Group Johnson Capital Group Bellwether Real Estate Capital LLC Ziegler Financing Corporation Columbia National Real Estate Finance, LLC Bank of America Merrill Lynch NCB, FSB Q10 Capital LLC Resurgent Capital Services Amount ($ millions) $10,207 $8,326 $7,153 $6,727 $2,860 $2,444 $2,237 $1,645 $1,644 $1,606 $1,414 $1,210 $1,209 $1,042 $982 $837 $631 $558 $480 $413 $273 $260 $253 $194 $180 $178 $136 $107 $29 $11 $6 $4 $0 Number of loans 1,914 2,811 835 1,283 548 590 353 174 270 348 303 123 195 153 124 113 69 60 58 101 25 24 3 41 31 25 53 10 4 4 2 2 6 Avg. Loan Size ($m) $5.3 $3.0 $8.6 $5.2 $5.2 $4.1 $6.3 $9.5 $6.1 $4.6 $4.7 $9.8 $6.2 $6.8 $7.9 $7.4 $9.1 $9.3 $8.3 $4.1 $10.9 $10.8 $84.4 $4.7 $5.8 $7.1 $2.6 $10.7 $7.3 $2.8 $3.1 $2.0 $0.0 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 87 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing Life Insurance Companies Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Company PNC Real Estate / Midland Loan Services GEMSA Loan Services LP Prudential Asset Resources Northwestern Mutual NorthMarq Capital New York Life Investments Manulife Financial / John Hancock Q10 Capital LLC HFF L. P. Principal Global Investors AEGON USA Reality Advisors, LLC Grandbridge Real Estate Capital, LLC ING Investment Management, LLC Nationwide Life Insurance Company Bank of America Merrill Lynch Thrivent Financial for Lutherans The Lincoln National Life Insurance Company Pacific Life Insurance Company Newmark Realty Capital, Inc. - SAM Member Essex Financial Services, LLC Berkadia Commercial Mortgage LLC Pacific Southwest Realty Services - SAM Member Bellwether Real Estate Capital LLC RiverSource Life Insurance Company Cohen Financial Barry S. Slatt Mortgage Company 4086 Mortgage Capital, Inc. Norris, Beggs & Simpson Columbia National Real Estate Finance, LLC OneAmerica Financial Partners Situs Serv LP DBA Situs Asset Management LLC Walker & Dunlop, LLC Sunrise Mortgage & Investment Co. Colliers Meredith & Grew - SAM Member TriMont Real Estate Advisors Medalist Capital Capital Advisors, Inc. Glacier Real Estate Finance RockBridge Capital LLC Thomas D. Wood and Company - SAM Member Johnson Capital Group Allianz Real Estate of America Westcap Corp. Morris, Smith and Feyh, Incorporated Amount ($ millions) $34,167 $33,143 $26,772 $21,494 $18,666 $15,285 $15,223 $13,067 $12,631 $11,150 $10,521 $9,728 $9,011 $7,893 $7,699 $7,470 $6,766 $6,390 $4,252 $4,199 $3,967 $3,148 $2,720 $2,506 $2,097 $2,049 $2,004 $1,627 $1,560 $1,542 $1,508 $1,479 $1,378 $1,186 $1,176 $1,115 $1,102 $975 $855 $845 $783 $770 $769 $747 Number of loans 1,422 2,167 2,115 625 3,072 589 1,388 4,371 1,171 1,192 1,386 2,817 1,228 1,227 2,039 3,300 1,253 162 679 1,034 889 670 698 818 458 892 441 354 132 551 438 149 937 95 21 253 306 285 71 404 108 26 187 154 Avg. Loan Size ($m) $24.0 $15.3 $12.7 $34.4 $6.1 $26.0 $11.0 $3.0 $10.8 $9.4 $7.6 $3.5 $7.3 $6.4 $3.8 $2.3 $5.4 $39.4 $6.3 $4.1 $4.5 $4.7 $3.9 $3.1 $4.6 $2.3 $4.5 $4.6 $11.8 $2.8 $3.4 $9.9 $1.5 $12.5 $56.0 $4.4 $3.6 $3.4 $12.0 $2.1 $7.3 $29.6 $4.1 $4.9 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 88 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing Life Insurance Companies Q1 2011 Rank 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 Company KeyBank Real Estate Capital George Elkins Mortgage Banking Company Goedecke & Co., LLC Venture Mortgage Corporation Bernard Financial Servicing Group - SAM Member Dickinson, Logan, Todd & Barber, Inc. - SAM Member Pace Financial Group Terrix Financial Corporation Innovative Capital Advisors, LLC Eustis Commercial Mortgage Corporation - SAM Member Western Capital Realty Advisors - SAM Member Great-West Life & Anuity Insurance Company Boston Mutual Life Insurance Company HomeStreet Capital Welsh Capital, LLC - SAM Member Wells Fargo Allstate Investments, LLC Minnesota Life Insurance Company NCB, FSB Amount ($ millions) $673 $662 $645 $485 $467 $438 $436 $368 $284 $246 $192 $147 $133 $58 $36 $26 $23 $4 $1 Number of loans 146 412 114 215 147 126 36 243 225 64 38 44 153 23 32 5 11 6 1 Avg. Loan Size ($m) $4.6 $1.6 $5.7 $2.3 $3.2 $3.5 $12.1 $1.5 $1.3 $3.8 $5.0 $3.3 $0.9 $2.5 $1.1 $5.2 $2.1 $0.7 $1.0 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 89 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing Warehouse (not elsewhere classified) Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Company Wells Fargo PNC Real Estate / Midland Loan Services KeyBank Real Estate Capital Bank of America Merrill Lynch Deutsche Bank Commercial Real Estate Prudential Asset Resources CWCapital LLC & CWCapital Asset Management Q10 Capital LLC Centerline Capital Group GEMSA Loan Services LP Berkadia Commercial Mortgage LLC Lancaster Pollard Mortgage Company Principal Global Investors Oak Grove Capital C-III Asset Management LLC Resurgent Capital Services RockBridge Capital LLC P/R Mortgage & Investment Corp. Pacific Life Insurance Company Litton Loan Servicing Barry S. Slatt Mortgage Company Bernard Financial Servicing Group - SAM Member NCB, FSB Dougherty Mortgage LLC Bridgelock Capital DBA (BLC SERVICING) Situs Serv LP DBA Situs Asset Management LLC Amount ($ millions) $28,390 $9,415 $4,712 $3,236 $1,415 $985 $174 $144 $123 $115 $111 $88 $81 $76 $75 $35 $34 $33 $33 $32 $27 $19 $13 $10 $4 $3 Number of loans 1,108 335 87 70 14 91 12 95 27 9 7 50 11 10 19 461 11 7 27 154 13 2 5 2 5 12 Avg. Loan Size ($m) $25.6 $28.1 $54.2 $46.2 $101.1 $10.9 $14.5 $1.5 $4.6 $12.8 $15.9 $1.8 $7.3 $7.6 $3.9 $0.1 $3.1 $4.7 $1.2 $0.2 $2.1 $9.5 $2.5 $5.0 $0.8 $0.3 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 90 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Primary & Master Servicing Other Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Company Berkadia Commercial Mortgage LLC PNC Real Estate / Midland Loan Services Bank of America Merrill Lynch Grandbridge Real Estate Capital, LLC Greystone Servicing Corporation, Inc. AEGON USA Reality Advisors, LLC Wells Fargo Bellwether Real Estate Capital LLC Capital Funding, LLC (formerly Capital Funding Group, Inc.) Pacific Life Insurance Company Litton Loan Servicing New York Life Investments Red Mortgage Capital, LLC First Housing Development Corporation of Florida Q10 Capital LLC M&T Realty Capital Corporation Walker & Dunlop, LLC Cohen Financial P/R Mortgage & Investment Corp. Amount ($ millions) $39,049 $31,279 $21,941 $1,212 $936 $870 $723 $474 $248 $103 $71 $61 $58 $52 $50 $32 $17 $16 $10 Number of loans 5,356 1,034 232 418 89 90 16 91 17 30 207 1 8 22 125 15 12 4 25 Avg. Loan Size ($m) $7.3 $30.3 $94.6 $2.9 $10.5 $9.7 $44.0 $5.2 $14.6 $3.4 $0.3 $61.0 $7.3 $2.4 $0.4 $2.1 $1.4 $4.0 $0.4 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 91 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 Total US Collateral Total Named Special Servicing CMBS, CDO or other ABS Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Company LNR Partners, Inc (U.S.) CWCapital LLC & CWCapital Asset Management C-III Asset Management LLC PNC Real Estate / Midland Loan Services Berkadia Commercial Mortgage LLC Wells Fargo Bank of America Merrill Lynch KeyBank Real Estate Capital ORIX Capital Markets, LLC The Bank of New York Mellon - Asset Solutions Division NCB, FSB Pacific Life Insurance Company TriMont Real Estate Advisors Situs Serv LP DBA Situs Asset Management LLC Prudential Asset Resources Deutsche Bank Commercial Real Estate Protective Life Corp Litton Loan Servicing Principal Global Investors Amount ($ millions) $201,348 $150,469 $116,200 $61,235 $36,564 $22,601 $17,538 $14,361 $8,339 $3,227 $2,370 $2,034 $1,313 $1,295 $1,194 $1,065 $935 $206 $140 Number of loans 15,015 11,788 11,936 8,977 6,225 1,052 153 2,290 1,329 486 1,118 286 20 403 15 72 295 587 45 Avg. Loan Size ($m) $13.4 $12.8 $9.7 $6.8 $5.9 $21.5 $114.6 $6.3 $6.3 $6.6 $2.1 $7.1 $65.6 $3.2 $79.6 $14.8 $3.2 $0.4 $3.1 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 92 Commercial Real Estate/Multifamily Finance Quarterly Data Book Year-End Survey of Commercial/Multifamily Mortgage Servicing Volumes as of December 31, 2010 C/MF Loans Secured by Collateral OUTSIDE the US Total Primary & Master Servicing TOTAL Q1 2011 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 Company Hatfield Phillips International, an LNR Property Company Deutsche Bank Commercial Real Estate PNC Real Estate / Midland Loan Services GEMSA Loan Services LP Manulife Financial / John Hancock Capital Services Group Berkadia Commercial Mortgage LLC LNR Partners Germany, an LNR Property Company Bank of America Merrill Lynch TriMont Real Estate Advisors Pacific Life Insurance Company Prudential Asset Resources The Bank of New York Mellon - Asset Solutions Division Amount ($ millions) $28,756 $24,845 $11,541 $9,649 $8,770 $4,238 $2,359 $1,022 $867 $748 $519 $334 $78 Number of loans 194 169 1,461 565 1,890 3,941 169 543 31 45 20 12 30 Avg. Loan Size ($m) $148.2 $147.0 $7.9 $17.1 $4.6 $1.1 $14.0 $1.9 $28.0 $16.6 $26.0 $27.9 $2.6 OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING SERVICING RELEASES Page 93 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 6. Recent Commercial/Multifamily Research Releases from MBA The following reports can be found at www.mortgagebankers.org/research. If you have trouble locating these or other MBA reports, email [email protected] 6/16/2011 Commercial/Multifamily Mortgage Debt Outstanding Flat in Q1; Five of Seven Top Investor Groups Increase Holdings, Bank and Finance Company Holdings Decline The level of commercial/multifamily mortgage debt outstanding remained essentially unchanged at $2.4 trillion in the first quarter of 2011, decreasing by 0.1 percent from fourth quarter 2010, according to the Mortgage Bankers Association's (MBA) analysis of the Federal Reserve Board Flow of Funds data 6/8/2011 Commercial/Multifamily Mortgage Delinquency Rates Mixed in First Quarter Delinquency rates among different commercial/multifamily mortgage investor groups were mixed in the first quarter of 2011, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. 5/5/2011 Commercial/Multifamily Mortgage Bankers’ First Quarter 2011 Originations Increase 89 Percent Over First Quarter First quarter 2011 commercial and multifamily mortgage originations were 89 percent higher than during the same period last year and 25 percent lower than during the fourth quarter of 2010, according to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. The decrease from fourth quarter 2010 reflects the industry's usual push to finalize deals before the end of the year, and subsequent drop-offs in first quarter numbers. 4/25/2011 Mortgage Bankers' Commercial/Multifamily Originations Up 44 Percent to $118.8 Billion in 2010 Commercial and multifamily mortgage origination volumes increased 44 percent in 2010 over the previous year, with mortgage bankers reporting $118.8 billion of closed commercial and multifamily loans, according to the Mortgage Bankers Association's 2010 Commercial Real Estate/Multifamily Finance: Annual Origination Volume Summation. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES RELEASES Page 94 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 4/5/2011 MBA Releases 2010 Commercial/Multifamily Originations Rankings Wells Fargo Bank was the top commercial/multifamily mortgage originator in 2010, according to a set of listings released today by the Mortgage Bankers Association (MBA). Other originators in the top 10 include HFF, L.P.; Meridian Capital Group, LLC.; CBRE Capital Markets, Inc.; Prudential Mortgage Capital Company; MetLife Real Estate Investments; Deutsche Bank Commercial Real Estate; PNC Real Estate; Northmarq Capital, LLC; and Berkadia Commercial Mortgage LLC. 3/17/2011 Commercial/Multifamily Mortgage Debt Outstanding Fell by $67 billion, 2.7 Percent in 2010, Driven by CMBS Declines The level of commercial/multifamily mortgage debt outstanding decreased by 0.5 percent in the fourth quarter of 2010, to $2.4 trillion, according to the Mortgage Bankers Association (MBA) analysis of the Federal Reserve Board Flow of Funds data. On a year-over-year basis, the amount of mortgage debt outstanding at the end of 2010 was $67 billion lower than at the end of 2009, a decline of 2.7 percent. 3/3/2011 MBA: Commercial and Multifamily Mortgage Delinquency Rates Remain Low for Life Companies, Fannie and Freddie; Fall for Banks/Thrifts; Rise Slightly for CMBS in Fourth Quarter During the fourth quarter of 2010, commercial and multifamily mortgage delinquency rates remained low for life insurance companies, Fannie Mae and Freddie Mac; fell for banks and thrifts for the first time since the 2006 and rose slightly for loans held in commercial mortgage backed securities (CMBS), according to the Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report. 2/7/2011 MBA: Strong Fourth Quarter Drives 2010 Commercial/Multifamily Mortgage Bankers Originations 36 Percent Above 2009 Levels Mortgage bankers originated $110 billion of commercial and multifamily mortgages during 2010 – an increase of 36 percent from 2009, according to preliminary estimates based on the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. 2/7/2011 MBA: Only 11 Percent of $1.4 trillion of Non-Bank Commercial/Multifamily Mortgage Debt Set to Mature in 2011 Of the $1.4 trillion balance of outstanding commercial/multifamily mortgages held by non-bank investors, only 11 percent of the total ($155 billion) will mature in 2011 and 9 percent ($125 billion) in 2012 according to today’s release of the Mortgage Bankers Association’s (MBA) 2010 Commercial Real Estate/Multifamily Survey of Loan Maturity Volumes. The survey found that maturities vary considerably by the type of investor holding the loan. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES RELEASES Page 95 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 2/6/2011 Wells Fargo/Wachovia, PNC/Midland and Berkadia Lead National Rankings of Commercial/Multifamily Servicing Volumes The Mortgage Bankers Association (MBA) today released its year-end ranking of commercial and multifamily mortgage servicers as of the end of December 31, 2010. On top of the list of firms is Wells Fargo with $451.1 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $337.4 billion, Berkadia Commercial Mortgage with $194.9 billion, Bank of America Merrill Lynch with $126.6 billion, and KeyBank Real Estate Capital with $118.9 billion. 2/4/2011 MBA's Woodwell Testifies on Commercial Real Estate Market Jamie Woodwell, Vice President of Commercial/Multifamily Research for the Mortgage Bankers Association (MBA), testified today before the Congressional Oversight Panel at a hearing titled, "Commercial Real Estate's Impact on Bank Stability." 12/17/2010 Encouraging Signs of Stronger Growth Data becoming available over the past month or two have provided encouraging signs of somewhat stronger growth in real economic activity. The most heartening developments have been in consumer spending, which rose at a 2.8% annual rate in third quarter and appears to be on track to equal that gain in the current quarter. 12/15/2010 Commercial/Multifamily Mortgage Debt Outstanding Down 1.3 Percent on Bank and CMBS Balances in 3Q 2010 The level of commercial/multifamily mortgage debt outstanding decreased in the third quarter, to $3.2 trillion, according to the Mortgage Bankers Associations (MBA) analysis of the Federal Reserve Board Flow of Funds data. 12/1/2010 Commercial and Multifamily Mortgage Delinquency Rates Mixed in Third Quarter Delinquency rates for different commercial/multifamily mortgage investor groups were mixed in the third quarter, according to the Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report. The delinquency rate for loans held in CMBS is the highest since the series began in 1997. Delinquency rates for other groups remain below levels seen in the early 1990's, some by large margins. 11/4/2010 Commercial Mortgage Originations Continue to Rise in Third Quarter Third quarter 2010 commercial and multifamily mortgage loan originations were 32 percent higher than during the same period last year and 15 percent higher than during the second quarter, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES RELEASES Page 96 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 10/26/2010 All Eyes on the Fed Some of the economic statistics becoming available during the past month have been relatively encouraging. Key components of new orders for durable goods—the total excluding transportation equipment, and orders for nondefense capital goods other than aircraft—turned up in August, and data for previous months were revised higher. The ISM index for nonmanufacturing, the sector where most jobs are created, rose in September. The August rise in consumer spending was modest, but larger than expected. And initial claims for unemployment insurance have fallen in the past seven weeks to the lowest level since late March. 10/14/2010 MBA Reports 40 Percent Decline in Multifamily Borrowing in 2009 Among Diverse Lenders and Loan Sizes In 2009, 2,725 different multifamily lenders provided a total of $52.5 billion in new financing for apartment buildings with five or more units, according to the Mortgage Bankers Association’s (MBA) Annual Report on Multifamily Lending for 2009. The 2009 dollar volume represents a 40 percent decline from 2008 levels. The most active 122 lenders represented just four percent of active lenders, but 77 percent of the dollar volume lent. Three-quarters of the active lenders made five or fewer loans over the course of the year. 9/23/2010 MBA Analysis: Commercial and Multifamily Mortgage Debt Outstanding Declined $52 Billion or 1.6 Percent in 2Q 2010 The level of commercial/multifamily mortgage debt outstanding decreased in the second quarter, to $3.24 trillion, according to the Mortgage Bankers Association’s (MBA) analysis of the Federal Reserve Board Flow of Funds data. 9/10/2010 Slow Growth Ahead Data releases over the past month leave no doubt that economic growth has slowed to a snail’s pace. Second quarter GDP growth was revised down to a 1.6% annual rate. Orders for durable goods other than transportation equipment fell sharply, and included an abrupt decline in a critical component—orders for nondefense capital goods other than aircraft. Existing home sales plummeted, falling to the lowest level since the series began in 1999, and the ISM index for non-manufacturing registered an unexpected decline in August. 9/2/2010 MBA: Commercial Delinquencies Up for CMBS, Flat for Banks in Second Quarter Delinquency rates were mixed in the second quarter for commercial/multifamily mortgage investor groups, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES RELEASES Page 97 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 8/24/2010 Wells Fargo Tops U.S. Commercial/Multifamily Servicers in MBA Mid-Year Rankings Report The Mortgage Bankers Association (MBA) today released its mid-year ranking of commercial and multifamily mortgage servicers as of the end of June 30, 2010. Topping the list of firms is Wells Fargo with $462.8 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $307.9 billion, Berkadia Commercial Mortgage with $202.6 billion, Bank of America Merrill Lynch with $133.4 billion and KeyBank Real Estate Capital with $124.7 billion. 7/28/2010 MBA: Second Quarter 2010 Commercial/Multifamily Mortgage Originations Increase Over First Quarter, But Remain Flat Over Last Year Second quarter 2010 commercial and multifamily mortgage loan originations were one percent higher than during the same period last year and 35 percent higher than during the first quarter, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. 7/14/2010 Slower Growth Ahead Incoming data over the past month or two have made for sobering reading. Data from the housing industry have revealed huge declines in housing sales and starts, building permits, and applications for loans to purchase homes. While some post tax credit slump was to be expected, more was borrowed from the future than had been bargained for. The manufacturing industry, which earlier had been growing rapidly, is cooling off—the ISM index for that industry fell in June. Consumers have lost confidence, and car sales have tailed off. Reports from abroad indicate a slowdown in the rate of growth in industrial activity. 6/22/2010 MBA Analysis: Commercial and Multifamily Mortgage Debt Outstanding Declined 0.9 Percent in First Quarter 2010 The level of commercial/multifamily mortgage debt outstanding decreased in the first quarter, to $3.31 trillion, according to the Mortgage Bankers Association’s (MBA) analysis of the Federal Reserve Board Flow of Funds data. 6/16/2010 MBA Report Shows Economic Weakness Continues to Weigh on Commercial Mortgage Performance Delinquency rates continued to increase in the first quarter for all commercial/multifamily mortgage investor groups, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. The delinquency rate for loans held in CMBS is the highest since the series began in 1997. Delinquency rates for other groups remain below levels seen in the early 1990’s, some by large margins. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES RELEASES Page 98 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 6/11/2010 European Debt Crisis: Drag on U.S. Growth A month ago, the developing European debt crisis was a cloud on the economic horizon. During the past few weeks, rain has begun to fall. 5/18/2010 MBA Study: First Quarter 2010 Commercial/Multifamily Mortgage Originations Increase from Year Earlier, Though Levels Remain Low First quarter 2010 commercial and multifamily mortgage loan originations were 12 percent higher than during the same period last year and 26 percent lower than during the fourth quarter of 2009, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. 5/12/2010 A New Question Mark on the Horizon The performance of the U.S. economy since the middle of last year has exceeded most forecasters’ expectations. Led by sharply rising inventory investment, the economy has rebounded from the deepest recession of the postwar period to record an average annualized growth rate of 3.7% during the past three quarters. The resurgence of the manufacturing sector has been particularly notable; since the trough in June of last year, manufacturing output has risen at an annual rate of 9%. While weak employment growth and moderating wage rates have depressed aggregate real wage income, consumer spending adjusted for inflation has nonetheless strengthened, rising in the first quarter at an annual rate of 3.6%, although much of that increase was due to a jump in spending on durable goods. Business investment in equipment and software has also contributed importantly to growth, and orders for nondefense capital goods point to continuing gains in the months immediately ahead. 4/22/2010 Mortgage Bankers’ Commercial/Multifamily Originations Down 46 Percent in 2009 Commercial and multifamily mortgage origination volumes decreased 46 percent in 2009 among repeat reporters, with mortgage bankers reporting $82.3 billion of closed commercial and multifamily loans, according to the Mortgage Bankers Association’s 2009 Commercial Real Estate/Multifamily Finance: Annual Origination Volume Summation. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES RELEASES Page 99 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 4/12/2010 Will Long-Term Interest Rates Remain Low? Fourth quarter real GDP growth was revised down a bit to a 5.6% annual rate, a revision too small to be significant. Data coming in during the past month suggest a real GDP growth rate of around 3% or a little less in the first quarter of 2010, well below the fourth quarter pace. Consumer spending appears to have risen a bit above a 3% annual rate—a surprisingly strong performance given little or no increase in real disposable income during the quarter. Federal consumption and investment also appears to have strengthened appreciably from its pace late last year. But inventory investment and business investment in equipment and software will make smaller contributions to economic expansion in the first three months of this year than they did in the prior quarter. Residential investment probably declined in the first quarter, given the recent monthly pattern of residential construction. 4/7/2010 Wells Fargo Was Top U.S. Commercial/Multifamily Originator in 2009 According to MBA Wells Fargo Bank was the top commercial/multifamily originator in 2009, according to a set of listings released by the Mortgage Bankers Association (MBA). Other originators in the top 10 include PNC Real Estate; Deutsche Bank Commercial Real Estate; CBRE Capital Markets, Inc.; HFF L.P.; Prudential Mortgage Capital Company; Meridian Capital Group; MetLife; Northmarq Capital LLC and Capmark Financial Group Inc. 3/18/2010 MBA Analysis: Commercial and Multifamily Mortgage Debt Outstanding Declined 2.8 Percent in 2009 The level of commercial/multifamily mortgage debt outstanding decreased by 1.7 percent in the fourth quarter, to $3.4 trillion, according to the Mortgage Bankers Association (MBA) analysis of the Federal Reserve Board Flow of Funds data. On a year-over-year basis, the amount of mortgage debt outstanding at the end of 2009 was $99 billion lower than at the end of 2008, a decline of 2.8 percent. 3/15/2010 A Handoff to Final Sales Inventory investment is typically a strong contributor to economic growth early in a recovery from recession. The current recovery is no exception. During the latter half of last year, real GDP grew at an annual rate of 4.0%; inventory investment accounted for more than half of that increase. That component of GDP has further to go before reaching its typical share of GDP—about 0.4%--but it is now two-thirds of the way along that path. Most of the thrust from inventory investment will probably be over by midyear, when the effects of the fiscal stimulus program adopted last year will be waning. Maintaining a pace of growth sufficient to create jobs on a scale that will reduce unemployment will therefore require private final sales to step up. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES RELEASES Page 100 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 3/11/2010 MBA Report Shows Economic Fallout Continues to Impact Commercial Real Estate Markets/Delinquencies in 4th Quarter 2009 Delinquency rates continued to increase in the fourth quarter for most commercial/multifamily mortgage investor groups, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. 3/9/2010 MBA Analysis Shows Commercial/Multifamily Mortgage Performance Remains Stronger Than Overall Bank/Thrift Loan Portfolios Today the Mortgage Bankers Association (MBA) released its most recent Commercial/Multifamily Research DataNote, which examines the performance of loans and leases held by banks and thrifts as of the fourth quarter of 2009. The results show that commercial and multifamily mortgages continue to have the lowest charge-off rates of any loan type at banks and thrifts and have 30+ day delinquency rates lower than the overall portfolio of loans and leases held by these institutions. 2/23/2010 Federal Budget Deficits—A Threat to the Nation’s Future The 5.7% annual rate of increase in real GDP last quarter was the strongest in 6 years. Inventory investment contributed 3.4 percentage points to the expansion; inventories were still being drawn down during the quarter, but at a much less rapid rate. But the quarter wasn’t just about inventories; there were positive developments with regard to final sales. Business investment in equipment and software increased at a 13% annual rate, and exports increased even faster. Moreover, the 2% rise in spending by consumers was stronger than might have been expected, since it followed a quarter in which consumer outlays had been boosted by the cash for clunkers program and second quarter additions to disposable income from the stimulus package. 2/2/2010 MBA Study: Originations of Commercial and Multifamily Mortgages Increased in Fourth Quarter 2009 Fourth quarter 2009 commercial and multifamily mortgage loan originations were 12 percent higher than during the same period last year and 15 percent higher than during the third quarter of 2009, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. 2/1/2010 Wells Fargo/Wachovia, PNC/Midland and Berkadia Lead National Rankings of Commercial/Multifamily Servicing Volumes The Mortgage Bankers Association (MBA) today released its year-end ranking of commercial and multifamily mortgage servicers as of the end of December 31, 2009. On top of the list of firms is Wells Fargo/Wachovia Bank with $473.8 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $322.9 billion, Berkadia Commercial Mortgage with $217.9 billion, Bank of America Merrill Lynch with $131.7 billion, KeyBank Real Estate Capital with $128.5 billion, and GEMSA Loan Services LP with $102.3 billion. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES RELEASES Page 101 Commercial Real Estate/Multifamily Finance Quarterly Data Book Q1 2011 2/1/2010 Only 13 Percent of Non-Bank Commercial/Multifamily Mortgage Debt to Mature in 2010; Seven Percent in 2011 The Mortgage Bankers Association (MBA) today released the results of its 2009 Commercial Real Estate/Multifamily Survey of Loan Maturity Volumes. The survey indicates that the volume of commercial and multifamily mortgage debt maturing in 2010 and 2011 is relatively low. Of the $1.45 trillion balance of outstanding mortgages held by non-bank investors, only 13 percent of the total ($183.9 billion) will mature in 2010 and 7 percent ($99.8 billion) in 2011. The survey also found that maturities vary considerably by the type of investor holding the loan. 1/12/2010 Signs of Life in the Economy Economic growth appears to have picked up significantly in the final three months of 2009 from the subdued 2.2% annual rate of the third quarter. Fourth quarter GDP growth of roughly 4-1/2% seems in train. A larger increase in inventory investment is the main reason for stronger fourth quarter growth; final sales rose at about the same pace as in the prior three months, but with a different mix—a smaller contribution from consumer spending offset by an improved performance of net exports. OUTLOOK ENVIRONMENT PRODUCTION OUTSTANDING SERVICING RELEASES RELEASES Page 102 About the Commercial Real Estate / Multifamily Finance DataBook The Commercial Real Estate / Multifamily Finance DataBook is produced quarterly by the Research and Economics staff of the Mortgage Bankers Association and can be found at www.mortgagebankers. org/research. For more information, contact Jamie Woodwell, MBA’s Vice President of Commercial / Multifamily Research, at (202) 557-2936 or [email protected]. About the Mortgage Bankers Association The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s web site: www.mortgagebankers.org.