Intermediary Segmentation in the Commercial Real Estate Market

54 Pages Posted: 27 Nov 2019

See all articles by David Glancy

David Glancy

Board of Governors of the Federal Reserve System

John Krainer

Board of Governors of the Federal Reserve System

Robert J. Kurtzman

Board of Governors of the Federal Reserve System

Joseph Nichols

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: 2019-11-15

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.

Keywords: Commercial real estate, Life insurers, Segmentation

JEL Classification: G21, G22, G23, R33

Suggested Citation

Glancy, David and Krainer, John and Kurtzman, Robert J. and Nichols, Joseph, Intermediary Segmentation in the Commercial Real Estate Market (2019-11-15). FEDS Working Paper No. 2019-079. Available at SSRN: https://ssrn.com/abstract=3493625 or http://dx.doi.org/10.17016/FEDS.2019.079

David Glancy (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

John Krainer

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Robert J. Kurtzman

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Joseph Nichols

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2983 (Phone)

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