Coleman: Life Cos. Will Go Beyond Multifamily in 2013

BETHESDA, MD-A life insurance company's construction-to-permanent loan secured earlier this summer for a mixed-use project in Arlington, VA, could well augur similar, and perhaps grander, transactions in 2013. The loan, arranged by Walker & Dunlop for 2001 Clarendon Blvd., was unusual in that it had a 13-year term with the first three-years as interest-only, followed by a 30-year amortization schedule.It was also non recourse.

But while that might have been eyebrow-raising in August, by first quarter of 2013 it could well be common for life insurance companies, speculates Walker & Dunlop SVP of Capital Markets Andrew Coleman, who arranged the deal. "I expect to see construction perm loans in play for other asset classes next year, not just multifamily" which has been the favored asset class for life companies this year, he tells GlobeSt.com.

The Clarendon Blvd. asset is a solid play for the life company. Located in the high-demand area of Arlington, the project will offer 154 residential units and approximately 30,000 square feet of retail space on the street level. The property, which will be located close to the Courthouse Metro station, is expected to be available for occupancy in April 2014.

For the most part, life companies played it safe in 2012, Coleman says, providing construction perm financing for multifamily and only occasionally mixed-use or other assets. "Now we're starting to see lenders get their toes back into the water for construction perm loans on, for example, hotels."

Demand is also growing for such loans, he adds. "We have seen a huge influx of demand because of where rates are. Folks want to lock in financing. A 13-year fixed rate at current rates is a great deal." One final bit of good news from Coleman: he predicts life insurance allocations for commercial real estate will be greater in 2013 than they were in 2012.