By The Numbers

This month, Sam Chandan, PhD, Global Chief Economist of Real Capital Analytics, provides a 2011 forecast for the industry. He cites sales that are double those of 2009 with stronger equity and debt markets, but acknowledges the unevenness of the recovery. Here’s his perspective on the credit markets.

Credit Markets Ease – Underpinning gains in major markets and for the highest quality properties, the availability of credit in support of significant property sales, as well as for the refinancing of maturing debt, has improved sharply in recent quarters.

Buoyed by the aforementioned pricing trends and nascent recovery in property fundamentals in major markets and some property sectors, a broader range of lenders – including CMBS conduit originators, foreign banks and life companies – has re-engaged with commercial real estate investors in the latter half of the year, albeit on terms that remain conservative by historic standards and even as smaller banks have curtailed their lending. This improvement in mortgage availability has been amongst the necessary conditions for a broader move towards normalization in the sector’s capital markets.

Coinciding with the improving position of many lenders, the dominant role of agency financing in the apartment sector has moderated as other institutions have begun to compete more aggressively for lending opportunities.

In major markets, in particular, institutional and securitized lenders’ readiness to provide new acquisition financing on performing assets has supported the shift in investor activity away from the agency and private buyers that dominated activity in 2009 and early 2010, and towards sales of larger core properties in the nation’s leading markets.

The improvement has pushed new acquisition financing to 35% of loan originations in 2010, up from 32% in 2009 when the balance weighed further in favor of refinancing activity. This trend will continue into 2011, albeit unevenly.

Read and download the full article including:
  • The key Question for 2011
  • Prospect for mortgage availability
  • Commercial financing predictions
  • Distressed property: Plateau/Risk of Unresolved

Read the full article at:

Dr. Sam Chandan is Global Chief Economist of Real Capital Analytics and an adjunct professor at the Wharton School of the University of Pennsylvania. Chandan holds a PhD in applied economics from Wharton and was a doctoral scholar at Princeton University. His complete biography is available at

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