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Intermediary Segmentation in the Commercial Real Estate Market

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Abstract

Banks, life insurers, and commercial mortgage-backed securities (CMBS) lenders originate the vast majority of U.S. commercial real estate (CRE) loans. While these lenders compete in the same market, they differ in how they are funded and regulated, and therefore specialize in loans with different characteristics. We harmonize loan-level data across the lenders and review how their CRE portfolios differ. We then exploit cross-sectional differences in loan portfolios to estimate a simple model of frictional substitution across lender types. The substitution patterns in the model match well the observed shift of borrowers away from CMBS when CMBS spreads rose in 2016.

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  • David P. Glancy & John Krainer & Robert J. Kurtzman & Joseph B. Nichols, 2019. "Intermediary Segmentation in the Commercial Real Estate Market," Finance and Economics Discussion Series 2019-079, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2019-79
    DOI: 10.17016/FEDS.2019.079
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    Cited by:

    1. Beate Monika Philipps, 2021. "Commercial Real Estate Loans - Categorization of an Investment Segment," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 7(1), pages 5-26.
    2. Thiemo Fetzer & Benjamin Guin & Felipe Netto & Farzad Saidi, 2024. "Insurers Monitor Shocks to Collateral: Micro Evidence from Mortgage-backed Securities," CRC TR 224 Discussion Paper Series crctr224_2024_590, University of Bonn and University of Mannheim, Germany.

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    More about this item

    Keywords

    Commercial real estate; Life insurers; Segmentation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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