DISCOVERING COMMERCIAL MORTGAGE STATISTICS
Although financial institutions and commercial mortgage banking firms have an abundance of statistics relevant to the decision of whether or not to provide financing for a particular property (e.g., vacancy rates, absorption rates, demographics, rent levels, etc.), they have very little information about the business of commerical mortgage financing. The following two hypothetical memos, one from a chief executive and the reply from the head of the real estate department, suggest the questions that arise and the answers that can be given.
Following the memos is a description of where statistical information on commercial mortgages can be obtained and the sources used by the Department of Housing and Urban Development (HUD) for its monthly lending survey. The article concludes with some recommendations that the financial regulatory agencies collect more detailed information on commercial mortgages, following the example set by the American Council of Life Insurance for life insurance company investments.
Memo to the head of the commercial real estate financing department
From: Chief executive
The board of directors has asked me to discuss our share of the commercial mortgage market and to outline the directions that I think we should be taking to increase or decrease our market share. I believe it is important to compare ourselves to our competition, considering particularly our percentage of delinquencies. For this report, I will need by next week not only the most recent statistics on our commercial mortgage activity but also: * The total amount of commercial
mortgage holdings and originations
in the United States, broken down
by property type, and by type of financial
institution. * The commercial mortgage holdings
and originations of institutions
which are competitors of ours in the
commercial mortgage market, giving
the percentage of commercial
mortgage assets to total assets held
by each institution. * The delinquency and foreclosure ratios
on commercial mortgages in
the United States, by location and
by types of properties. * Our costs of origination and servicing
as compared with our
Thanks for your prompt attention to this matter.
Memo to the Chief executive From: Head of the commercial real estate financing department
In response to your request, I enclose the statistical information available and list the sources, but there are significant gaps in the availability of statistics for commercial mortgages as I will explain in this memo and a memo for the file. In the memo for the file, I conclude with some recommendations about statistics that you may wish to support in any discussion with others in the commercial real estate financing business.
Commercial mortgage holdings and
The total amount of commercial mortgage originations by lender group in the United States for 1989 is shown in Table 1 for permanent mortgages and Table 2 for construction loans. The total amount of commercial mortgage holdings by lender group as of December 31, 1989 is shown in Table 3. The source of these figures is HUD. [Tabular Data Omitted]
HUD does not collect statistics by property type, such as statistics for office buildings or shopping centers. It divides commercial mortgages between "multifamily" and "nonfarm nonresidential." The statistics cover almost all lender groups in the commercial mortgage market, except mortgages held by individuals or partnerships, mortgages held by credit corporations, mortgages held by REITs, and mortgages held by foreign institutions.
The American Council of Life Insurance (ACLI) publishes commercial mortgage statistics by property type, regional or metropolitan area location, and interest rate and yield, mortgage structure (e. …