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Retail Loan Volume Way Up in Q4 ’09 February 10, 2010

Posted by Sean Tufts in Research/Data.
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According to the latest report by the Mortgage Brokers Association’s quarterly survey of loan originators, the retail product sector had the highest overall Origination Index of the 5 major product types.  The index rose 101% (to 95) from the 2008 Q4 showing more stability in the lending market for retail centers and posting the 5th consecutive quarterly increase.

Another interesting note is the dramatic increase in loan originations from Life Insurance Companies (up 112% with an index of 93).  Conduits, or CMBS originations, were nearly non-existent coming in with a measly index of 1 (down from a high of 519 in 2006!)

At the NAIOP South Sound Real Estate Forecast last week, there were expressions of similar optimism.  “James Bach, a debt and equity finance specialist (at CBRE Melody Capital), says developers can stop being quite so gloomy. ‘You guys need to lighten up,’ he told them Thursday. ‘We are going to have money for you this year.’”  Bach also reiterated the increase in Life Insurance debt saying that “they have a gun to their heads to get money out the door,” he said, but this “doesn’t mean they are going to go hog wild.” (DJC article)

As capital markets and financing begin to loosen for retail products we believe values and CAP rates will continue to stabilize and transaction volume will start to increase.  Our opinion is that the increased lending activity will increase the buyer pool for REO and distressed assets this year and create a more competitive buying environment, which will lessen the opportunity for huge “steals” in our market.

To view the entire MBA report, click here

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