The commercial mortgage market will shrink for another year, bottoming out at about $2.9 trillion in late 2011, and then begin to rise in 2012 with volume reaching about $3.3 trillion by 2015, according to new research issued today by Prudential Real Estate Investors. PREI® is the real estate investment management business of Prudential Financial, Inc. (NYSE: PRU).

?The availability of debt is a critical element of the commercial real estate market. Closely monitoring debt allows us to gauge the health of the market and to plan strategy accordingly,? said Jack Taylor, managing director at PREI. ?As commercial mortgage volume nears the bottom of the current cycle, we will begin to see activity pick up.?

The PREI report ?Deleveraging the Commercial Mortgage Market: How Much Further to Go?? bases its findings on a model that calculates the ratio of commercial mortgages as a share of gross domestic product. Based on this model, the commercial mortgage market will shrink through the fourth quarter of 2011, dipping to $2.9 trillion from its $3.4 trillion peak in the first quarter of 2009, a cumulative drop of about 14 percent.

A similar pattern occurred in the 1990s, when the ratio of commercial mortgages as a share of GDP fell for three years after the absolute size of the market was growing. Back then, the banking crisis was mostly limited to the commercial real estate market. This time, the crisis affected other sectors, notably the residential sector. Also, the commercial sector's growing connection to the capital markets should make the current crisis steeper, yet faster to resolve than in the 1990s, according to the report.

PREI is a leader in the global real estate investment management business and has been managing real estate investments for institutional clients since 1970 when the company introduced the industry's first commingled, open-end equity real estate fund to U.S. pension plans. PREI offers a broad range of investment vehicles that invest in private and public market opportunities in the United States, Europe, Asia, and Latin America. Headquartered in Parsippany, N.J., PREI has offices in Atlanta, Chicago, New York, San Francisco, Miami, London, Lisbon, Madrid, Munich, Paris, Luxembourg, Istanbul, Singapore, Mexico City, Rio de Janeiro, Hong Kong, Beijing and Tokyo. As of September 30, 2010, PREI managed about $44.8 billion in gross real estate assets ($25.7 billion net) on behalf of more than 490 clients worldwide and ranks among the largest real estate investment managers. For more information, please visit http://www.prei.com

Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $750 billion of assets under management as of September 30, 2010, has operations in the United States, Asia, Europe, and Latin America. Prudential's diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. In the U.S., Prudential's iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/.

Prudential Financial, Inc.
John Chartier, 973-802-9829
john.chartier@prudential.com