X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

BETHESDA, MD-Life insurers have shown few signs of the panic that has overtaken the real estate debt markets. To be sure, though, they are becoming more cautious in their terms and in the markets into which they lend, with DC counted among the top destinations.

However, by and large, many of the life insurance-led transactions that were completed before the turmoil began could probably still get done today, says Ted Hermes, VP of the local office of Walker & Dunlop. The company recently closed a $32-million permanent loan for Ryan Park Center, a mixed-use project, that Hermes believes could have been negotiated in the current environment, with perhaps a few tweaks to the leasing commitment. Located in Ashburn, VA, Ryan Park Center consists of two class A buildings of 61,532 sf each, four pad sites, three restaurants, and one bank, for a total of 137,739 sf of retail and office space.

The loan, which Hermes says encompassed most of the development costs, was structured with a 10-year term, three years of interest only payments, and 25-year amortization. The borrower was Ryan Park LLC, a joint venture between two local developers. The lender was Aegon and it agreed to increase loan amount from $29 million to $32 million and add three years of interest only payments after the application had already been signed and the interest rate had been locked.

This was a take-out construction loan based on a forward commitment made in fall 2005, he says. Because it was a life insurance company it did not have the fall back position of the material adverse conditions clause that so many lenders have been citing in recent weeks to pull out of CRE financial commitments. “Portfolio life insurance companies are still interested on these types of loans,” he says. The difference between 2005 and today, he says, would be that the lender would most likely have required a 75% occupancy rate, compared to the 50% the Ryan Park Center had in 2005.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.