The Mortgage Bankers Association has released their quarterly survey of commercial/multi-family loan originations, and it showed continued dramatic deterioration in all sectors, including an 80% plunge in bank lending.

Earlier this week, I wrote that commercial real estate transaction volume had declined to practically zero, so it's no surprise that loan originations would show a concurrent decline, but that decline was precipitous: Q1 loan originations declined to the lowest quarterly level in the period.

In addition to the 80% decline in bank lending, insurance company loan activity declined by 66% and GSE lending dropped by 26%. It was so bad, I decided to paint a picture. the things I do for you



There were some intriguing data in the survey though (read the full report here). One interesting finding is that while all loan activity decreased, industrial loan activity decreased the least, even less than multi-family. In fact, industrial loan activity from Q4 to Q1 actually increased by 67%. With loan capital still flowing into that sector, well capitalized industrial REITs are still relatively healthy.

Indeed, industrial REIT yields are among the lowest in the sector. This should enable industrial REITs to recover more quickly. Unfortunately, that is small comfort to those who lost their shirts betting on the likes of Pro-Logis (PLD). It's also a sing of increasing economic activity, and probably of inflation as well...

Not surprising is that Fannie Mae and Freddie Mac continue to be practically the only game town for apartment lending, which declined by 61% in the quarter from one year ago. Hotel loans were down a whopping 88%, followed by healthcare (down 80%), retail (down 76%) and office lending (down 66%). Aside from the good news for industrial REITs, the only other obvious silver lining is that the rate of decrease in activity has slowed. So things aren't getting much worse, but they're also unlikely to get much better anytime soon.