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Blackstone Mortgage Leads Surge in Nonbank Lending

REIT Lenders Face Hurdles to Maintain Historic Growth

Nonbank lenders boosted loan origination by more than 62 percent, buoyed by property sales at or near historic valuations, according to early figures from mortgage real estate investment trusts.


Even before all year-end numbers are in, data collected by CoStar on 23 publicly reporting mortgage REITS show they originated $31 billion in loans and expanded their total loan portfolios to more than $65 billion, an increase of about $11 billion.


The surge increased competitive pressure on banks to cut deals on loan terms and played a part in reducing bank commercial real estate loan growth. The nation's banks expanded those loan portfolios by $92 billion, an increase of 4.3 percent, which was down from loan growth of 5.6 percent the previous year, according to FDIC data.


Blackstone Mortgage Trust exemplifies the growth of nonbank lenders. The REIT more than doubled its loan origination last year from 2017, to $7.9 billion from $3.6 billion. Blackstone's loan assets grew $4.1 billion last year. Only one bank out of the more than 5,400 in the country outperformed that pace -- Citibank with commercial real estate loan growth of $5.38 billion.


The competitive pressure from nonbank lenders could wane a bit this year as they face challenges on several fronts. For one, 2019 got off to a slow start following stock market volatility in December and some concern about peak valuations, REIT executives said.

In addition, U.S. investors in collateralized loan obligations popular among nonbank lenders may be shifting to fixed-rate assets after the Federal Reserve's recent flip on interest rate hikes.


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