WASHINGTON, DC-Life companies are stepping up the levels ofleverage they are willing to tolerate--at least for officebuildings in the DC area, reports Phil Mudd of Cassidy Turley. Thecompany is currently working on a handful of office financetransactions involving life companies that he expects to see closeby the end of the year. The debt leverage ratios for these dealsrange from the very low end of 40% to a bordering-on-aggressive70%.

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While the willingness of some firms to accept 70% LTVs istelling, so is the fact that the majority of firms still favordeals that are of moderate leverage, or 60% to 65%, Mudd tellsGlobeSt.com. “I would say moderate leverage still rules the day butit is interesting that some firms are edging higher.”

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Mudd points to the recent financing of 2033 K St., which he,along with colleagues Christian Miles and Jon Goldstein, helpedsecure with a life company that he declines to name. They arrangeda 10-year, $20-million fixed-rate loan for the property, which isowned by affiliates of Quadrangle Development Corp. and AmericanRealty Advisors. Mudd says its leverage could be consideredmoderate.

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But the lender liked other attributes of the property as well,making it difficult to tease out just how much leverage on astandalone basis matters to a life company. The asset is aneight-story, 170,825-square-foot office building located in theheart of DC’s Central Business District. Fully leased, Mudd says,“It is a solid property by any measure.”

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