In theory this is a welcome development for the CRE industry, with life insurance companies' inclusion eventually providing an indirect boost for capital flows. Life insurance, especially in the absence of a conduit market, has become a key source of funds for commercial real estate. However, for the most part it is clear that life insurance companies scaled back their allocations for commercial real estate this year for obvious reasons. One example is MetLife, an erstwhile very active investor in real estate. Speaking at the Urban Land Institute's DC conference last week, Mark Wilsmann, managing director and head of Real Estate Portfolio Management at MetLife, told the audience that for the most part life insurance companies--including MetLife--are taking care of their existing portfolios this year. In the past MetLife had invested between $7 billion to $10 billion in CRE portfolios. In 2009, he said, that figure will be between $4 billion to $5 billion and of that amount, perhaps $2 billion is for new investment; the rest is refinancing.

Of course, including life insurance companies in TARP does not necessarily translate into increased funding for commercial real estate. Indeed, banks that have already received capital injections have shown little inclination to open their lines to borrowers. At this point, the best the CRE industry can hope for is that life insurers will maintain their allocation in 2010, one finance broker tells GlobeSt.com. "We need more details before we can make any other assessment than that."