Wells Fargo, JPMorgan Chase doubled down on CRE in Q2

Commercial real estate loan books grew more quickly than overall assets

TRD New York /
Jul.July 15, 2016 02:00 PM

Wells Fargo and JPMorgan Chase expanded their overall commercial real estate loan portfolios in the second quarter amid a challenging lending environment, according to earnings statements released this week.

Wells Fargo’s commercial real estate mortgage balance in the second quarter was $126.1 billion – up 11.5 percent from $113.1 billion a year ago. The figures denote the average balance over the course of the quarter.

The company’s overall interest-earning assets grew at a slower rate of 8.4 percent, meaning commercial real estate loans now take up a bigger share of Wells Fargo’s portfolio than they did a year ago. Its construction loan balance also increased year-over-year, from $20.8 to $23.1 billion.

The average interest rate, however, fell from 3.48 to 3.41 percent for commercial mortgages and from 4.12 to 3.49 for construction loans.

JPMorgan Chase’s commercial banking division, meanwhile, held $18.4 billion in real estate loans (on average) on its books over the second quarter, up 34 percent from $13.7 billion in the second quarter of 2015. While real estate loans made up 8.8 percent of the bank’s commercial loans a year ago, they now accounted for 10.4 percent.

Both banks saw their overall profits dip slightly, due in part to lower interest rates across the globe. Ten-year treasury yields were at a near-record low of 1.58 percent at the time of publication, down from 2.28 percent a year ago. Lower interest rates tend to make it harder for banks to earn a profit on their loans.

The two banks are among New York City’s most active commercial real estate lenders.  Wells Fargo holds a dominant position in the multifamily lending market and last year financed the Blackstone Group and Ivanhoe Cambridge’s $5.3 billion acquisition of Stuyvesant Town-Peter Cooper Village with a $2.7 billion Fannie Mae loan.

JPMorgan Chase, meanwhile, recently funded French billionaire Marc Ladreit de Lacharrière’s $525 million acquisition of 693 Fifth Avenue with a $259 million loan.

Both banks are reportedly part of a consortium that will finance SL Green’s office project One Vanderbilt with a $1.5 billion loan.


Related Articles

arrow_forward_ios

SL Green snags private-equity firm at
One Vanderbilt

The Daily Digest - Tuesday

WeWork bonds hit low, new LLC legislation went farther than intended: Daily digest

Jackson Park at 28-40 Jackson Avenue and Tishman Speyer's Rob Speyer (Credit: StreetEasy and Tishman Speyer)

Tishman Speyer locks in $1B in financing for Jackson Park

Clockwise from top left: The Watchtower building at 25 Columbia Heights, Long Island University at 1 University Plaza, The Rheingold at 10 Montieth Street and 871 Bushwick Avenue in Brooklyn (Credit: Wikipedia and Google Maps)

These were the top 10 outer borough loans last month

Banks see uptick in mortgages, but remain wary ahead of potential Fed interest rate cut

Clockwise from top left: 54 Crown Street, 451 10th Avenue, 46-09 69th Street and 270 Park Avenue (Credit: Google Maps)

The top 10 biggest real estate projects coming to NYC

Mack Real Estate Group's Richard Mack and JPMorgan's Jamie Dimon with a rendering of 123 Melrose Street (Credit: Getty Images and ODA Architecture)

Yoel Goldman sews up long-term funds for Rheingold Brewery Project

Manhattan hotel at center of 1MDB fraud case lands $615M refinancing

arrow_forward_ios