The Pool of US Commercial-Property Lenders Shrank (Again)
The acquisition of First Republic Bank by JPMorgan Chase & Co. will lead to the consolidation of two of the top 25 commercial-real-estate lenders in the U.S., which may further complicate asset pricing due to changing competition to fill the debt portion of the capital stack.
If one is shopping around for a loan and 20 lenders are competing for your business, the likelihood is you will get better rates and terms than if you have only, say, five lenders looking to work with you. The scale of the latest consolidation is not that extreme; nonetheless, remove First Republic — at #21 on our list of the top 25 loan originators for 2022 — and it points to a further thinning of the lender herd.1
With the consolidation, however, may come a rebalancing of the composition of the U.S. lender field. The nonbank financial system has gained ground since 2015 when bank lenders have faced uncertainty and regulatory scrutiny.
The picture on construction lending
Recent data from the Federal Reserve2 has shown a deceleration in the growth of construction lending by banks. The failure of First Republic Bank is not helpful with respect to the uncertainty that is leading banks to curtail construction loans. Still, our analysis of known loans originated by this lender shows it was not among the top 25 construction-loan originators in 2022.
Top commercial-property lenders in the US
1 Loan volume from MSCI Real Capital Analytics database.
2 “Assets and Liabilities of Commercial Banks in the United States - H.8.” Federal Reserve, April 28, 2023.
Commercial-Property Debt Not Just a Small Bank Story
Recent articles suggesting smaller banks are behind 70% of lending to commercial real estate in the U.S. could be worrying if true. Our analysis shows that while they have gained ground, their share of total originations is still less than one-third.Explore more
CMBS Dominates First Wave of Commercial Property Debt
In an environment of tighter lending and increased debt costs, commercial-property loans totaling nearly $900 billion will come due in 2023 and 2024 total. The biggest source is commercial mortgage-backed securities, according to our analysis.Learn more
Fewer Lenders Active in US Commercial Mortgages
There is greater attention on the U.S. debt market after the failure of Silicon Valley Bank and Signature Bank and struggles elsewhere. We look at the already-declining pool of lenders active in commercial real estate.Read more