CRE equity and debt issuance tops $1 trillion mark.

In another sign of the widening appeal and growing availability of commercial real estate equity and debt securities, REIT and commercial mortgage backed securities issuance has surpassed the $1 trillion mark, according to data compiled by the National Association of Real Estate Investment Trusts.

REITs are companies that own and generally manage diverse portfolios of large-scale commercial properties; some REITs finance commercial real estate. CMBS are securities collateralized by a pool of mortgages placed on commercial real estate.

In credit markets, the outstanding volume of CMBS reached $682.7 billion at the end of 2005, including securities collateralized by loans on multifamily properties and other nonresidential properties. In addition, equity REITs had issued another $82.9 billion of unsecured debt in the form of notes and bonds that trade in the corporate bond market.

In equity markets, the market value of equity REITs at the end of 2005 stood at $318.2 billion, including $301.5 billion of common shares and another $16.7 billion of preferred stock, according to NAREIT. In addition, the equity market capitalization of publicly traded real estate companies not electing REIT status contributed another $21.2 billion to the total.

"The REIT industry's evolution in the last decade alone has been both eyecatching and breathtaking," according to NAREIT president and CEO, Steven A. Wechsler.

"What we refer to as the modern REIT era that began approximately 15 years ago, gave rise to the securitization of a large number of real estate companies. Their stock offerings have made it possible for investors large and small to gain access to, and efficiently and easily invest in, large-scale commercial properties. Just as CMBS has helped a broader range of investors to the commercial mortgage market."

"CMBS has thrived in the dynamic commercial real estate finance market and represents a little more than two-thirds of the total $1 trillion of the commercial real estate debt and equity securities that have been issued," said Margie Custis, president of CMSA.

"It has helped fuel the growth and stability of the commercial real estate market by providing a liquid and transparent investment product for investors and providing competitively priced loans for borrowers."

Since the early 1990s, the publicly traded real estate industry has offered an increasing number of investment opportunities to stock and bond investors alike. The average annual year-over-year growth in equity market capitalization has increased 27 percent between 1990 and 2005. CMBS activity has climbed 10-fold in 10 years, while the REIT industry has seen its combined equity market capitalization soar from $57 billion in 1995 to $337.8 billion as of April 30.