WASHINGTON, DC-When First Potomac acquired 500 First St., NW, last month for $68 million, the deal was notable because it was the REIT’s first core office acquisition in the District. There was also a surprise in store for Kenneth Gentzel, SVP and managing director at NorthMarq: The permanent financing of $39 million, placed by Hartford Insurance Co., took only 20 days to close after the lender's issuance of the term sheet. Gentzel arranged the financing with colleague Gary McGlynn, also an SVP at NorthMarq.

In truth, the speed of this particular transaction’s financing is part of a larger picture that is just becoming clear to brokers such as Gentzel. Life companies, never the most transparent as to their strategies and allocations with commercial real estate, seem to be stepping up their appetite and aggressiveness.

This is true not only in DC but on a national scale as well, in select markets, at least. Life companies, for example, have been more inclined to club on deals that by themselves would be too large to absorb. The District, already a favored investment destination, has seen that and more in recent weeks and months.

"We are pleasantly surprised on a weekly basis at the level of return life companies are providing. Leverage levels continue to rise while spreads go down," Gentzel says.

For example, he is working on a grocery-anchored retail transaction with a 75% leverage. A year ago, life companies would have turned their noses up at anything over 65%. Six months ago, they would have shunned anything over 70%, he says. Pricing is also becoming more aggressive. Currently the firm is working on a multifamily deal in which the interest rate, if it were to be locked in today, would be below 4%. As it happens, Fannie Mae won this particular transaction, he says, but the three life companies competing for it were competitive.

Gentzel says he expects NorthMarq’s DC office’s life company volume to have doubled this year compared to last.