MBA Special Report: Capital on the Move
Lending and sales are looking up, especially for multifamily.
Coming off a strong fourth quarter, capital markets executives are gearing up for another robust year of loan originations, according to their discussions during the Mortgage Bankers Association’s Commercial/Multifamily Finance Convention and Expo this week.
Last year was a busy yet “bumpy” year, noted Hilary Province, executive vice president of production and capital markets for Berkadia, during a general session.
The first half of 2024 was slow for originations. But when rates dipped for a short time in the fall, borrowers rushed to lock them in, and that flurry of loans closed by year-end.
According to Mortgage Banking Association figures released at the conference, Q4 commercial/multifamily originations rose 84 percent over Q4 2023, and quarterly originations were up 30 percent from Q3 2024. Multifamily originations grew 69 percent in Q4 over Q4 2023 and 22 percent over the previous quarter.
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Following that short dip in rates, the 10-year Treasury—commercial real estate’s key benchmark—rose and is now trading between 4 and 5 percent. MBA is predicting rates will be higher for longer but relatively flat. That should give borrowers and lenders the confidence to transact.
According to MBA, mortgage originations will rise 16 percent from this year’s $508 billion in loans to $583 billion, and 60 percent ($361 billion) of that is projected to be multifamily. In 2026, lending is expected to grow another 16 percent to $709 billion, $419 billion of that in multifamily lending.
Much of this year’s opportunity will be driven by the $957 million of commercial and multifamily loans maturing this year. “There’s been a wall of maturities forever—it’s way overplayed,” said Wally Reid, senior managing director & capital markets debt platform leader for JLL Capital Markets. “But I do believe some of it will be a reality this year because there is so much.”
Sales finally make a comeback
With lenders expected to no longer extend loans, the wall of maturities will also produce a fair share of sales transactions, since many borrowers will be forced to sell or bring in additional equity. Overall, sellers are expected to be more willing to sell at current values, allowing capital markets groups to rebalance their businesses among refinancings, acquisition loans and sales.
“I do believe we are going to see more sales activity,” said Jeffrey Majewski, executive managing director of CBRE Capital Markets. “We’re going to see deals clear the market.”
Managing the business
Despite the ample flow of loans and sales, Provinse noted that it is still a challenge for capital markets groups to find the right execution for each client: refinance, sale or recapitalization.
“This isn’t slap down a refi and move on,” she said. “We are all working really hard structuring. The good thing about the market is we have so many capital sources. But it is a lot of work to figure out what is the best source of capital.”
Majewski noted that it will be a challenge for capital markets groups that may have shrunk their staffs to gear back up quickly for the higher deal volume. “There is going to be an increase in activity, and that increase is going to put more strain on our staff and our infrastructure,” he said.
Reid said he is worried about morale among dealmakers. “Most of the people I talked to are working their butts off, and we don’t celebrate anymore,” he said.
