Commercial Loans and Fun Blog

Conduit Lending is Back!

Before the sub-prime meltdown in late 2007, conduit lenders made about 53% of all commercial loans nationwide by dollar volume. Conduits offered commercial mortgage loans at extremely low, fixed rates - rates almost as low as those offered by life companies. More importantly, conduits would make commercial loans on average quality commercial properties located in secondary locations, like the central business districts of Rust Belt cities.

CMBS lenders (conduit lenders) would also regularly make loans up to 75% loan-to-value ... and sometimes even higher. This turned out to be the straw that broke the camel's back. When the sub-prime crisis ignited in 2007, nervous investors dumped commercial mortgage-backed securities at huge discounts. Their concerns proved to be justified as commercial real estate plummeted by 40%.

For the past three years, conduit lending dropped to practically nothing.It was as if the entire industry was nuked off the face of the planet.

I am pleased to announce that conduit lending is back! Major banks with CMBS loan departments are now making conduit loans again. These are long-term (10 year), fixed rate loans in the noise range of 5.25% to 5.5%. The typical loan is between 65% and 70% loan-to-value. Most of these banks are holding these conduit-style loans in portfolio, but with a serious eye towards securitization.

Several CMBS pools have already gone to market. The bonds sold quite well. These were small pools, however. The pools were around $600 million to $700 million. Prior to the crash in 2007, some CMBS offerings were close to $1.5 billion in size.

The sale of commercial mortgage-backed securities depends on the appetite of the B-piece buyers, the go-go guys who buy the riskiest bonds in an offering - those that are unrated. In the 2007 downturn, a great many of the B-piece buyers were completely wiped out. Therefore it was surprising to see a fairly strong market for B-pieces develop early this year.

Of course, CMBS loan today are much more conservative. The loan-to-value ratios for CMBS loans have fallen from 75% to 80% all the way down to 60% to 70%. This makes the B-piece much more attractive.

How can commercial property owners get by with a conduit loan of just 62% LTV based on today's already-depressed commercial property values? Many new conduit loans are being written with mezzanine loans at the time of origination, taking the combined loan-to-value ratio up to 75% to 78%.

Banks and conduits throughout the nation are on a hiring binge. A number of the major banks already have a fairly sizable pipeline of deals.

Need a conduit loan right now?  You can submit your deal to scores of hungry CMBS lenders in just four minutes using C-Loans.com.

Could Banks See Loses in Commercial Real Estate as Large as They Suffered in Residential Real Estate?

Have you ever noticed how hard it is to find information about commercial real estate and what is to come in the future? Since late 2007, early 2008 newspapers, magazines and finance websites have had a plethora of information about the future of residential real estate, but it seems as if the future of commercial real estate is a topic many avoid.

Working in the commercial lending industry, we are faced with all types of questions from brokers, investors, buyers and owners. Many want to know what it is we are seeing in the commercial real estate lending market and what we expect to see in the future. In my experience, finding any definitive answer is difficult, but when you are in an environment where you work with these individuals and you are working to provide commercial mortgages, it becomes apparent that something is happening.

Over the last few years, we have seen delinquencies rise and fall, we have seen investors become much more cautious with their investments, we have seen deals come to us where the lender is requiring payoff, but the property value is too low to provide a loan which sufficiently pays off the bank. What we are experiencing the most however is that many banks are calling their loans and getting out of the commercial mortgage business.

On February 14, 2010 during a drive from Sacramento to San Francisco, I came across a talk radio show discussing the future of Commercial Real Estate. The guest was Tony Wood, author of the “Commercial Real Estate Tsunami, A Survivor’s Guide for Lenders, Owners, Buyers and Brokers.” I was hooked immediately. Everything out of Mr. Wood’s mouth rang true and I finally found what I was looking for…how to prepare for the future.

I listened the entire segment and learned that the book would not be available until May, but I could pre-order the book immediately. The day I received it, I read it cover to cover. I keep it at my desk to use as a reference and I also use it to provide examples when placed in similar situations. This book has given me insight on how to prepare for what is coming.

As you know, we are currently in a very weak economy, to make matters worse, “All indications are that the trillion-plus dollars of commercial real estate loan maturities between 2010 through 2013 combined with the commercial real estate markets being battered by the economic collapse we are currently experiencing will result in conditions the marketplace has never seen before” (Tsunami). It is believed that the coming losses will be historic and that this will have a devastating impact on lenders who are not prepared.

This means being prepared in all aspects of commercial real estate finance which include foreclosures, REO properties, property management, loan modifications, lending expectations and of course, investor concerns. There are ways to prepare for what is coming, but the time to do so is now.

The book provides congressional testimony from the Real Estate Round Table, The National Association of Realtors and the Federal Reserve from July of 2009. It is an interesting read which details the future problems in commercial real estate. It shows that many are aware of what is coming, but are not quite sure how to handle it. The book is one of a kind, in which it offers solutions and ways to prepare for the impact debt maturities will have on our economy.

For lenders, it will be important to pay attention to borrowers. We have so many new loan requests coming to us reporting that they have to pay off their loan in the next 30 to 60 days. Some of these borrowers have great credit, great pay histories and financials, yet their banks are requiring them to payoff their loan. This is causing many of them to default and results in losses to the bank. Many banks are accepting short pays on these loans just to get them off the books. The problem is that the banks aren’t listening to the borrower. Instead of working out an amicable solution, some banks are throwing these good credit customers out the door and creating the losses for themselves. Of course, not all loans are workable, the lender has to really listen to the borrower, review their financials and complete a thorough assessment to see if there is a possible workout including maturity extensions and loan modifications

Owners will also have many battles to fight, even if they are not in a position where they have to refinance. With vacancy rates increasing and rental rates decreasing, it will be important to maintain your building occupancy. Pride of ownership will be a huge factor as well as property maintenance. The tenant is king in these situations and if you want to keep your tenants then you need to be sure they are happy with their surroundings, because the guy down the street is offering months of free rent and lower lease rates. Some are even throwing in large contributions to tenant improvements, can you compete? Owners who will soon be facing a refinance need to get started now. There is no time to wait because if you are not ahead of the game, you will be shocked when you find out the bank is not willing to give you the loan to value you were hoping for.

Buyers need to be sure they are paying attention to the market and not just buying what they think will be a great deal. There are hidden dangers in buying an REO property that if a buyer did not thoroughly research the local market, they could end up with a cash eating property. Due diligence has never been more important, why did the previous owner fail? Is there something wrong with the property? If you’re buying a distressed asset, the lender typically does not know the history, do you? It will be important to do your homework.

Commercial Real Estate Brokers are already having a tough time trying to sell and lease properties. The property owners are pushing them to sell, the buyers want to buy properties for pennies. Now is the time for brokers to start to think outside the box. Look for ways to save through property tax appeals and lease restructuring. Plan ahead and create a recover plan. If you haven’t created one before you have losses, you won’t have the time to pull yourself out. Plan ahead and be ready for more losses and how to recover from them.

While I have only touched on a few ideas from this book, there are many ways to prepare for the “Tsunami”. Even though I feel prepared, I still have many questions. Lucky for me, on Wednesday October 6, I have the opportunity to meet Mr. Wood and I plan to ask him personally.

We have all seen the devastation and immense losses resulting from the crash of residential real estate… are you prepared for the upcoming losses to commercial real estate? If not, it is time to get started.

This blog article was written by Angelica Gardner, the Senior Vice President of Blackburne & Sons Realty Capital Corporation, a $50 million commercial hard money lender based in Sacramento, California. The views expressed are her own.  She can be reached at 916-338-3232.

A Few Commercial Lenders Must First Make Some Outrageous Profits

A banker, preparing to give a speech on the future of commercial real estate lending, called me last Thursday and asked for my opinion. Below is what I told him.

The banks are only making a handful of commercial real estate loans. The commercial loans that banks will fund today are those with either 40% down payments or those commercial loans where the borrower maintains huge deposits with the bank. The normal commercial loan to a mere mortal - a regular investor with just 25% to put down - no longer exists.

So where does that leave us?

If we want commercial lending to recover to a healthy and vibrant level, a handful of commercial lenders need to start to making an outrageous profit. Once this happens, it is a fundamental maxim of capitalism that, "Outrageous profits breeds competition." Seeing the competition enjoy outrageous profits will tempt the banks back into the market.

So are any commercial lenders making an outrageous profit? This year we have seen the birth of several opportunity funds, whose target yields are in the range of 16% to 18%. If these funds achieve their targets, these are the types of yields that will cause some bankers to yearn to return to the market.

What is an opportunity fund? An opportunity fund is pooled investment vehicle, like a mutual fund. A hard money broker might put together a mortgage investment fund that consists of the pooled investment funds of several hundred private investors. Although such a mortgage investment fund is very similar to an opportunity fund, there is a difference.

The investors in an opportunity fund are typically not private investors, but rather they are institutional investors, such as pension funds, college endowment funds, hedge funds and wealthy family trusts. Opportunity funds therefore tend to be larger than hard money mortgage investment funds, so the deals that these lenders do are also larger.

Right now these opportunity funds are financing the purchase and renovation of REO's (bank foreclosures) and the purchases of discounted notes. They are also helping large developers buy out their current lenders at a substantial discount (discounted pay-off's).

You can apply to scores of hard money mortgage funds and opportunity funds by using C-Loans.com.

The Company Avoids Real Estate and Personal Property Taxes and the City Gains Jobs

Most states and many local governments offer industrial revenue bonds (IRB) as a way to encourage relocations and expansions of companies that provide jobs and expand economic opportunities for residents and the community. IRBs are an incentive to encourage a company to invest locally.

What is an IRB?

An IRB is a loan to a company to build or buy a facility or buy land and/or equipment.

How do they work?

The city issues the bonds but is not making the loan. The investor - usually an institution, like a bank or life insurance company - buying the bond makes the loan. The company must find its own bond purchaser. It can also buy its own IRBs. The city technically owns title to the facility built with IRBs and leases it to the company for up to 20 years. At the end of the term, title is transferred to the company.

Here’s an example: Company X wants to build a $15 million plant and buy $20 million in equipment. The city issues a $35 million bond for 20 years. During this period the company will repay the bond. The company gets a break on property taxes for land of $4.3 million over 20 years and a break on equipment property taxes of $1.15 million over 7 years. It’s not correct to say the company is getting $35 million in tax breaks. The $35 million represents the amount of money the company will invest in our community

Do IRBs affect the city’s credit ratings?

No. Since the city is not responsible for the loan, the IRB does not have an impact on the city’s credit rating.

Why is an IRB desirable to a company?

IRBs help companies save money in two ways: Because the city owns the title to the project, it’s exempt, for up to 20 years, from 95 percent of property taxes on land, buildings, and equipment. Also, a company may receive gross receipts and compensating tax exemptions on initial purchases of equipment made with bond proceeds.

Can a small business use an IRB?

Because of financing costs, IRBs are typically used for larger capital projects. They are generally not recommended for projects less than $2 million.

Do companies still have to pay taxes?

The company must still pay a portion of property taxes, as well as all corporate taxes. In most cases companies will pay gross receipts taxes on the services or goods they produce and sell. In addition, a company’s employees are paying income taxes and gross receipts taxes on their purchases.

What are the steps to apply for an IRB?

• After a company identifies a site, its representatives meet with the City’s Economic Development Department and the City's economic development corporation to get support and identify concerns.
• The company identifies a purchaser for the bonds.
• The company prepares a project description and calculates potential employment and submits an application, which includes the company’s financial information, to the City's Economic Development Department.
• The EDD prepares a staff analysis for review by the Municipal Development Commission, the Administration and the City Council.
• The Municipal Development Commission holds a public hearing and makes a recommendation to the city to issue the IRBs.
• A city councilor, usually the one in whose district the project will be, sponsors an inducement resolution and/or bond ordinance to the City Council.
• After passage of the ordinance, attorneys prepare closing documents covering the transaction.

• At closing the bond purchaser buys the bonds.

If your company would like help placing these bonds, please call George Blackburne at 574-360-2486 or email him at george@blackburne.com.  In the Subject line, please type, "Industrial Revenue Bonds."

Learned a Few New Commercial Finance Terms This Week

Even though I have been working in commercial real estate finance for over 30 years, I still learn new terms and concepts all of the time. Here are a few new ones:

NPN - The acronym, "NPN", stands for for Non-Performing Notes.

DPO - The acronym, "DPO", stands for discounted pay-off. In recent weeks I have personally learned of a bank selling a $17 million performing loan for just $7.5 million. On another deal a group of banks are willing to sell $37 million of debt for just $8 million.

I love working on DPO deals (discounted pay off deals). Do you have a bank willing to accept a big haircut to get rid of a note? Please call me directly, George Blackburne III (the old man) on my cell at 574-360-2486 or email a deal to me to george@blackburne.com. In the subject line, please type the words, "DPO Deal."

White Box Finish - This implies a finished unit that is missing only those items that the prospective owner or prospective tenant will choose, such as the type of counter-top, the carpeting, the color of cabinets, and for office or retail space, the location of the bathrooms and interior walls.

A Mezzanine Loan is Personal Property, Not Real Property

This is really juicy gossip. A mezzanine lender is foreclosing on a $100 million mezzanine loan that is secured by the largest apartment complex in New York City.

You will recall that a mezzanine loan is not a real estate loan. Instead, a mezzanine loan is loan that is secured by the membership interests (think shares) of a LLC (think corporation) that owns a huge real estate project. If you own all of the company and the company owns all of the property, then you own all of the property.

Why would a lender make a mezzanine loan rather than just a normal mortgage loan? The answer is speed. It can take up to 18 months to foreclose a mortgage in New York. A lender can foreclose on the membership interests of a limited liability company in just 30 days because membership interests in an LLC are just chattel (personal property), not real estate.

The law merely requires that the lender seize the membership interests without breaching the peace and that it conduct the sale in a commercially reasonable manner; i.e., in a manner in which such property is usually sold.

Today I received the fascinating email below that details an upcoming UCC (personal property) foreclosure sale. This is GOOD STUFF.

Dear George,

I am writing to inform you of the upcoming opportunity to bid at public auction on the "Peter Cooper Village/Stuyvesant Town" Mezzanine Loans 1, 2 and 3 (with a face amount of $100 million each), which are indirectly secured by the Peter Cooper Village/Stuyvesant Town property located in Manhattan, New York. The public auction will be adjourned from August 25, 2010 until September 8, 2010 at 11:00 AM (for Mezzanine 3), 12PM (for Mezzanine 2) and 1PM (for Mezzanine 1) at the offices of Brown Rudnick LLP, located at Seven Times Square, 47th Floor, New York, NY 10036.

Peter Cooper Village/Stuyvesant Town, well known as a “City within a City”, was built for MetLife in 1947 and is considered Manhattan’s largest apartment complex. The complex is comprised of 56 buildings, situated on 80 acres and includes 11,227 residential apartments. In addition to the residential component, the complex contains approximately 100,000 square feet of retail space, approximately 20,000 square feet of professional office space, and 6 parking garages with 2,260 licensed spaces totaling approximately 400,000 square feet.

For additional information regarding the public UCC foreclosure sale, please execute the attached Confidentiality and Investment Agreement. Upon the execution and return of the Confidentiality and Investment Agreement in such form, you will be given a USER ID and Password to access the CONFIDENTIAL website located at ...

Thanks,

Joe Schmoe
Lender

Borrowers and Mortgage Brokers Can Now Deliver Commercial Loan Packages For Free Using Box.net

Do you need a commercial mortgage loan right now? Using C-Loans.com, you can submit your commercial loan application to 750 different commercial lenders in just four minutes, and C-Loans.com is free!

Years ago, if a commercial mortgage borrower or a commercial loan broker wanted to deliver a commercial loan package to a commercial lender, he would have to ship by snail mail a package of financial documents nearly one foot thick. After all, commercial lenders insist on collecting a financial statement and two years' tax returns on each borrower, a financial statement and two years' tax returns on each business owned by each borrower, a financial statement and two years' tax returns on the LLC or partnership that actually owns the property, and a copy of every single lease. That's a whole lot of documents!

With the rise of email, these loan documents are now usually delivered by email in the form of 10 to 15 different PDF's. However, most bankers have a limit on the size of any email attachment of 10MB. This means that in order for a commercial mortgage borrower or a commercial loan broker to deliver a complete loan package, they have to break the package up into six or seven smaller, separate emails. This is quite a messy inconvenience.

Now there is a far more efficient way to deliver commercial loan packages. Box.net is a free data storage software program available online where you safely store the financial information of the borrower. Simply scan each document - think of a tax return - and save it as a separate PDF. Then you upload the 10 to 15 PDF's, each containing a financial document like a lease - to a folder on Box.net. Finally, you simply send the lender a link to the folder on Box.net where he can find and view/download each of the PDF's.

It is much safer to password protect the link to this folder on Box.net, and using Box.net, this is easy to do.  You can then simply call the lender and give him the password over the phone.

It takes just five minutes to create your own free account on Box.net. They give you a certain amount of storage for free in hopes that you will so love the system that you will buy additional space from them.

Do you need a commercial mortgage loan right now? Using C-Loans.com, you can submit your commercial loan application to 750 different commercial lenders in just four minutes, and C-Loans.com is free!

Understanding the Interest Reserve and How to Compute It

Need a commercial construction loan right now? If the loan is larger than $4 million and the collateral is commercial and not residential (sorry, no homes, condo's or apartments), please write to me, George Blackburne, at george@blackburne.com or call me directly on my cell at 574-360-2486.  We have a terrific bond financing program.

When a developer secures a $2 million commercial construction loan from a bank to build a project, did you know that he starts to make monthly payments the very first month?

"Gee, George, that sounds awful. How can that poor developer afford to make the monthly payments on a $2 million loan when the property isn't built yet and generating rent? Those payments have to be in the range of $14,000 per month!"

It's not as bad as it seems. First of all, commercial construction loans are disbursed in small progress payments. During the early months of the loan, the outstanding balance might only be a few hundred thousand dollars. Secondly, the monthly payments owed to the bank on a commercial construction loan are just interest-only payments based on the outstanding balance. The interest-only monthly payments on an outstanding balance of just $200,000 aren't too bad.

Lastly, the construction loan budget contains an interest reserve to cover the construction period interest. In other words, the monthly loan payments on a commercial construction loan come right out of a little savings account built right into the construction loan budget.

"That sounds much better. But how does the bank know how large of an interest reserve the developer will need?"

One way to compute the interest reserve is for the developer and the bank to build a spreadsheet that lays out when all of the construction loan proceeds are expected to be disbursed. Then, using the spreadsheet, the bank can compute the exact amount of interest that will be needed in the interest reserve.

On smaller commercial construction loans, the bank will use a rule of thumb. Suppose a $2 million commercial construction loan has an estimated term of 1.5 years. During the early months of the loan, only a few thousand dollars will be disbursed. At the latter end of the term, almost all $2 million of the commercial construction loan will be disbursed.

Bankers will therefore assume that on average about half the loan will be disbursed over the 18 months. In this example, half of $2 million commercial construction loan is $1 million.

Therefore, to compute the required interest reserve, the banker will multiply $1 million (the average outstanding loan balance) times 7% per year (the annual interest rate) times 1.5 years (the anticipated term of the commercial construction loan), which equals $105,000.

"Gee, George, that seems simple enough. But what happens if the property takes longer to build or longer to lease than the developer expects?"

The developer is toast. He will have to start making the interest-only payments out of his personal pocket, and if he can't, the bank may decide to foreclose on him immediately. Hey, there's a reason why developers make the big bucks. They take some serious risks.

Need a commercial construction loan right now? If the loan is larger than $4 million and the collateral is commercial and not residential (sorry, no homes, condo's or apartments), please write to me, George Blackburne, at george@blackburne.com or call me directly on my cell at 574-360-2486. We have a terrific bond financing program.

If One Commercial Loan Officer Turns You Down, Just Call Another One at the Very Same Bank

Need to place a commercial mortgage loan right now? You can submit your commercial loan in 750 different commercial lenders in just four minutes using C-Loans.com. And C-Loans.com is free!

Placing a commercial mortgage loan with a bank is more of an art than a science. Below you will find some placement tips that may help you to close your commercial loan:

1. Before you send a commercial loan package to a lender, it is customary to call the commercial loan officer first to run the deal by him.
2. Hugely important tip: Whenever you call a loan officer to run a deal by him, make sure you first ask him, "Hey, John, this is George Blackburne at C-Loans, and I'd like to run a deal by you. Did I catch you at a bad time? I'll be happy to call back later if you're swamped right now." Brokers and borrowers who fail to do this will find that the loan officer will only listen long enough to find the first excuse to turn the deal down - just because he's harried at the moment and doesn't want to be bothered.
3. When you do send a package, don't send some great, big, thick package that will take the loan officer five hours to review. Instead, just send a two or three page Executive Loan Summary. Most commercial mortgage loan documents are now delivered by email, instead of by snail mail or Federal Express.
4. Make sure your Executive Loan Summary includes at least one photograph of the property.
5. When a commercial loan officer receives a PDF by email, in the back of his mind he is worried that the PDF might contain 400 pages of documentation. As a result, he will tend to put off reviewing it.
6. I therefore like to include in the body of the short email words like the following: "John, attached is a short Executive Loan Summary on the deal we discussed the other day. It's just three pages long, and there's a nice color photograph of the property. It's really nice!"
7. It is customary in commercial mortgage finance to call the lender a few hours later and say, "Hey, John, this is George over at C-Loans. I am just calling to make sure you received the Executive Loan Summary on that deal we discussed the other day. I know you haven't had time to review it yet. I just need to verify that you received it."
8. Now in reality, what you're really doing when you make the above call is to gently kick the commercial loan officer in the booty to read the package. He's not lazy. He's just a veteran who knows that many commercial mortgage brokers will ship out a loan package to 30 different lenders. It's called shotgunning.  Your kick-in-the booty call is a welcome message to the commercial loan officer that this deal is alive and waiting just for him, if he likes it.
9. Every commercial mortgage deal ever originated has a few black hairs (flaws). There is no such thing as a perfect commercial mortgage deal. Therefore, if you are going to close a commercial mortgage loan, you need to find a commercial loan officer who both likes you and is willing to fight for your loan in Loan Committee.
10. If the first commercial loan officer that you call at Bank of America, for example, just brushes you off (turns you down without seriously considering the deal, just to get rid of you), don't give up! Just call a different commercial loan officer at Bank of America and try to sell him on the deal. Over the years I have closed numerous commercial loans this way.
11. Not all commercial mortgage loan officers are the same. Some will fight hard in Loan Committee to sell your deal, and others are as wimpy in Loan Committee as a spaghetti noodle. Based on a lifetime of experience in commercial real estate finance, here is my pecking order of commercial loan officers, from best to worst: Asian women (absolutely the best!), women on commission, men on commission, men on salary, and women on salary (very often too scared of losing their jobs to fight for you).
12. If your deal gets turned over to commercial loan officer that you can tell is an absolute wimp, pull the deal! Don't let the wimp work on it. The wimp will simply look for the first black hair and then turn you down. And since every commercial mortgage deal has a black hair, all you are doing is fouling the water at that bank. Why not pull the package back and resubmit it to a different loan officer ten days later?
13. My final tip is to learn to use Box.net (free data storage) to send your loan packages. This way the banker can just pull down the supporting loan documents (tax returns, financial statements, etc.) as he needs them.

Need to place a commercial mortgage loan right now? You can submit your commercial loan in 750 different commercial lenders in just four minutes using C-Loans.com. And C-Loans.com is free!

Commercial Mortgages Are Being Paid Down or Written Off

The size of the commercial mortgage market in the United States continued shrinking in the first quarter, to $3.31 trillion from $3.34 trillion at the end of last year, according to the Mortgage Bankers Association's analysis of Federal Reserve Board flow-of-funds data. The universe of mortgages has now shrunk for five consecutive quarters and is now roughly the same size it was at the end of 2007.

Every major investor group, except the housing-finance agencies, private pensions, savings institutions and government entities, saw a reduction in the size of their mortgage portfolios. Commercial banking organizations saw an $18.9 billion, or 1.3 percent reduction in the size of their holdings, to $1.49 trillion. They are still the biggest holders of loans, accounting for 44.9 percent of the entire universe, down from 45.1 percent at the end of the fourth quarter.

CMBS and other securitization vehicles saw their portfolio of mortgages shrink by 1.6 percent over the last quarter to $679 billion. That accounts for 20.5 percent of the universe, down from 20.6 percent in the fourth quarter.

Life-insurance companies, which lately have become hungry to write loans but have faced tepid demand, saw their holdings fall by $4.4 billion, or 1.4 percent, to $301.9 billion. They now hold 9.1 percent of the total universe, down slightly from 9.2 percent at the end of last year.

The housing-finance agencies, meanwhile, saw their portfolios grow by $5.8 billion, or 1.9 percent, to $309 billion. That represents 9.3 percent of the commercial mortgage universe, up from 9.1 percent in the fourth quarter. If you look at only multifamily loans, the agencies - Fannie Mae, Freddie Mac and agency-backed mortgage pools - hold 36.3 percent of the $852.1 billion universe. That universe is up from $849 billion in the fourth quarter - testament that the agencies continue to actively write loans.

"Low levels of commercial mortgage borrowing mean that property investors are paying off and paying down more in mortgages than they are taking out," explained Jamie Woodwell, vice president of commercial real estate research at the MBA.  (Commercial Real Estate Direct)