Outstanding Debt of Commercial Mortgage Rose by $44.6 Billion in Q1


The covid-19 situation has caused great trouble globally. Irrespective of the industry, everyone has been affected by the lockdown situation. Real estate has been no different. 

The sector suffered greatly. However, there have been new changes and laws to cope with the loss and other issues faced by the industry. Therefore, it is expected that things are getting back to normal, and the real estate sector will come back on track. This is evident from the current stats. 

There have been different studies and reports to identify the current situation of the real estate industry. However, the case related to the debt of commercial mortgage or multi-family loans has clearly shown positive results. The details of which are mentioned here.

Impact of Covid in real state

Although things were getting back to normal, the real estate sector had a rough quarter. It was working from home orders and pandemic shutdowns along with concerns over the indoor public gathering that numerous hotels, restaurants, retail shops, and other businesses have shut down their doors permanently or have filed for bankruptcy. 

No doubt the conditions are improving for the sector, but commercial mortgage lending in this part hasn’t been active as a concern over the long-term impacts. Multi-family properties, however, depict another story.

Multi-family lending has seen significant challenges over the past couple of years. It was in 2019 that the record for multi-family lending was significantly affected. However, things changed tremendously. The loan terms for multi-family assets before Covid were better than ever. 

The market showed the industry’s low rate, aggressive underwriting, and high leverage were the reason behind it. However, when the covid-19 hit, it dropped the multi-family sale by 35%. In addition, while the dues under the contract fell through were more than the average right, i.e., seven times higher.

Because of the uncertainty of the market condition, multi-family lenders stopped or slowed down the funding. But things gradually gained pace as 2020 progressed. The result was an overall decrease in the multi-family housing stats and loan organizations. 

Although those months for multi-family housing were tough, it looks like the sector is already too boomed again in 2021.

The Mortgage Bankers Association recently issued a report where it was found about a $44.6 billion increase in the multi-family during the first quarter of 2021. This clearly shows that multi-family lending is still active and going more vital than ever.

What do the numbers tell?

Quarter 1 of 2021 showed a 1.1 % increase, bringing the total outstanding debts for multi-family or commercial mortgage property to $3.9 3 trillion. Of the total amount, the majority of the debt, which is 50%, is held by government-sponsored entity portfolios, agencies, and mortgage-backed securities. 

This is followed up by thrifts and banks which currently account for 28%. Further, the life insurance companies have a stronghold of 10%, local and state government has 6%, and finally, CDOC MBS and other ABS account for 3%. 

It has been found that the real estate investment trusts have seen a specific increase in the holding, which is by $4.9 billion. This accounts for a 5.2 % increase in holding and is the largest among all the entities. This presents a promising sign for residential REIT investors. 

No doubt some markets are experiencing some hardship with corporate multi-family rental properties, and the investors’ demand has remained strong despite all the uncertainty. However, there is a positive expectation for the coming time.

In the third quarter of 2020 cap rate reported by CBRE showed that industrial and multi-family real estate were most likely to offer above general price for the property. 

Besides, it was also found that 36% of the market survey for class apartments show a decrease in the cap rate. This indicated higher demand and the borrowers’ willingness to earn less when buying today.

Multi-family mortgage debt outstanding

Considering the multi-family mortgages in the first quarter of 2021, GSC and agency portfolios and MBS holds the largest share of the total debt outstanding at $861 billion. 

At the same time, the banking sector accounts for 481 billion dollars. Non-farm non-corporate businesses account for 1% which is $19 billion.

It is expected that there will be a 15% service and investment activity during the second half of the year as the investor’s confidence is rising in the sector proceeds, and it will be lower than the pre covid times. At the same time, the capital will be prevalent and available.

What changes have been seen in multi-family mortgage debt?

During the first quarter of 2031, agency portfolios saw the biggest gain in dollar terms for their holdings and multi-family and commercial mortgage debt, increasing by 2.8 %. 

At the same time, CDO and the ABS saw an increase in the holding by 2.8 %. Also, the commercial banks increase the value by 0.5%.

The private pension funds received the largest decline in the holdings for multi-family mortgage debt with 11.1%. At the same time, the finance company shows a drop in the holdings by 1.1 %.

Most lenders are desperate to increase their holdings in multi-family properties as they consider the segment to be the safest asset class. Thus, the availability of debt capital is becoming the primary reason for the tremendous increase in the demand for the sector.

What does this mean for investors?

An essential thing to note from the survey details is that the REITs have seen a tremendous increase in the holding of multi-family commercial debt. This clearly shows a demand for the sector, and the current returns are available for everyday investors. 

For instance, in 2021, equity residential, the largest residential REIT, acquired two new properties worth $95.7 million and $115 million. The purchase was made in a new market for the company. At the same time, Camden Property Trust acquired a new apartment community in Tennessee and Nashville for $105 million.

The acquisitions made by the companies are expected to help them improve their revenue through the expansion of their reach to new emerging markets. But, at the same time, the growth does not always mean increased returns and revenue for the company.

 Nevertheless, it is surely a great way to build shareholder value, and right now, it is visible that the demand and financing are there to offer proper support. However, it will be interesting to see how the multi-family market is impacted as the moratorium begins to expire in the summer. But as of now, the confidence in this market is exceptionally high.

Unfair advantage of real estate

Real estate investing is an effective way of gaining financial independence. This is because of the incredible returns and far better tax breaks the sector offers that the people prefer taking a step towards investing. 

Despite the changes made every day to curb the lost time and there is still great demand. After all the challenges the covid-19 period has brought forward for the industry, the multi-family commercial real estate is all set to boom again and rises better than before.


The multi-family commercial real estate sector’s stats clearly show a great demand for the industry, and it will be highly beneficial to invest in it now. However, for someone new to investing, it can be a bit challenging. 

In fact, in some cases, experienced professionals also face challenges in acquiring adequate loans, especially when the lenders are a bit hesitant about lending. In such a hard situation, having professional support can make a great difference. 

Private Capital Investors can offer adequate assistance. They have the most skilled professionals who will help you get the best. From guiding the current market situation to helping you get the financing for your project, the professionals there can offer adequate assistance. 

If you have made up your mind to invest in the sector, do not hesitate to contact them to get the help you need. They surely will guarantee you benefit a lot from your investment.

Want to learn more? Get in touch with us today.

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