Life insurers forging ahead in commercial mortgage lending

TRD New York /
Oct.October 19, 2011 11:20 AM

Life insurance companies are taking advantage of the volatile commercial mortgage market and tight lending strategies by Wall Street investment banks by becoming major lenders, the New York Times reported.

In the second quarter of 2011, life insurance companies underwrote $15.7 billion in new commercial mortgages — the largest number since the American Council of Life Insurers began keeping records in 1965.

“It is as if these guys died and went to heaven,” said Lawrence Longua, an associate professor at the Schack Institute of Real Estate at New York University. “Life insurance companies are pretty much the only game in town.”

Life insurance companies favor high-quality borrowers and trophy buildings. They also keep the majority of their loans on their balance sheets, the Times said. Investment banks are able to underwrite riskier loans because they pool their mortgages and issue bonds against them. In this market, however, lending is much less crowded marketplace.

“There is less competition,” said Robert Merck, a senior managing director and the head of real estate investments for Metropolitan Life, “which has allowed lenders like ourselves to put a lot of very good loans on the books for properties that meet our guidelines.” [NYT]

Related Article

The Watchtower building at 25 Columbia Heights, CIM Group’s Shaul Kuba (right) and LIVWRK’s Asher Abehsera (Credit: Wikipedia, CIM Group, and LinkedIn)

JPMorgan leads $335M refi for CIM and LIVWRK’s Watchtower renovation

Multifamily market still reigns in Queens, Blackstone balks after rent reforms and more of the biggest CRE trends right now

Real estate titans … and their toys

Developer seeks $40M for Opportunity Zone site in downtown Newark

This East End icon might finally be closing in on a sale

Mack-Cali sells Paramus office property, Murphy enacts land bank reforms & more North Jersey real estate news