Wells Fargo was the top multifamily lender of 2010, closing just under $8.4 billion, almost doubling the volume of its closest competitor, CBRE Capital Markets, which closed more than $4.2 billion last year.
Berkadia was a close third, with $4.1 billion, followed by PNC and Prudential, which were both around $3 billion, according to the Mortgage Bankers Association’s (MBA) Annual Originations Rankings.
Wells Fargo held on to the top spot for the second year in a row, with more than half of its volume coming through agency licenses. It was the top Fannie Mae lender at more than $2 billion, the third most prolific Freddie lender with $1.6 billion, and the third biggest FHA lender at $1.1 billion.
Agency Debt Continues to Dominate
Indeed, lenders with agency licenses were busy last year. The government continued to loom large over the debt market, as Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA) were collectively responsible for $42.6 billion in originations in 2010.
The market share of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac declined from over 80 percent to around 60 percent last year as more capital sources, including life insurance companies and conduits, grew active. But adding in the FHA, the agencies were collectively responsible for between 70 percent and 80 percent of the market.
“We definitely saw a pick up at the end of 2010 among a whole variety of investor groups—life companies, banks, thrifts,” says Jamie Woodwell, vice president of commercial/multifamily at the Washington, D.C.-based MBA. “This year, we’ve got continued low rates, and a competitive marketplace, so the expectation is that will probably draw some additional borrowers out that may not have been drawn out in 2010.”
The top life insurance lenders of commercial real estate in 2010 were MetLife, followed by Prudential, Northwestern, New York Life, and John Hancock. And the top conduit lenders were Deutsche Bank, Goldman Sachs, Wells Fargo, RBS, and Ladder Capital.
Rising Competition and Rates
Due to the increased competition, the GSEs have begun to shift away from higher-end luxury towers in major metros of late. Many private sector financiers are particularly drawn to such trophy assets, allowing the GSEs to instead focus on filling the void in lower-barrier markets.
“In the mid-rise and high-rise sector, the agencies have been able to pull back as a result of stronger competition from regional banks and insurance companies and foreign lenders than they have been in the garden apartment space,” says Sam Chandan, global chief economist for New York-based market research firm Real Capital Analytics. “The reliance on GSE financing in fact diminished over the course of 2010.”
But Chandan sees a rising interest rate environment on the horizon, continuing a trend that began in early November 2010 when the 10-year Treasury sat at 2.6 percent.
“We face a market where interest rates have the potential to rise in a significant way for any of a variety of reasons,” Chandan says, “whether it’s an improving economic outlook, or stronger inflationary pressures, or because Quantitative Easing means the largest buyer of Treasury debt is no longer a buyer of Treasury debt.”
TOP 10 MULTIFAMILY LENDERS (in billions)
|CBRE Capital Markets||$4.206|
|PNC Real Estate||$3.044|
|Walker & Dunlop||$2.153|
TOP 5 FREDDIE MAC LENDERS (in billions)
|CBRE Capital Markets||$2.9|
TOP 5 FANNIE MAE LENDERS (in billions)
|Walker & Dunlop||$1.5|
|PNC Real Estate||$1.23|
TOP 5 FHA LENDERS (in billions)
|Red Mortgage Capital||$1.1|
SOURCE: Mortgage Bankers Association