Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Exciting things are occurring in the world of commercial real estate finance. With Labor Day, the end of summer and back to school and work upon us, the life insurance companies are back. Liquidity is back. In just the past three weeks, we have seen more than 10 of the nation’s largest life insurance company lenders return to the market or reduce their rates so significantly that they appear to be saying, “We are open for business.” At least one of them is slashing rates to at or below 6.0% to attract quality business.

This is something we have not heard from insurance companies for well over a year in commercial real estate circles. This is not just good news—it’s great news. Increased liquidity, with the life companies re-entering the market and filling a huge void, will provide much-needed assistance in the challenging market ahead.

Over the past 12 months, those life lenders who have remained in the market have been quoting rates in the 7% to 8.5% range on low loan-to-value product. This has driven deals smaller than $20 million to regional bank recourse lenders. With the CMBS market crippled, borrowers with financing needs in excess of $20 million to $30 million were left to pay coupon rates greater than 7.0%+ to obtain low loan-to-value conservative loans.

We’re at the end of summer, and now several large life companies are back on the scene. The lenders have announced plans to ramp up their efforts and cut rates on conservative loans (below 65% based on realistic capitalization rates) to the 6% to 6.75% range on five-, seven- and 10-year non-recourse, fixed-rate loans. One of NorthMarq’s exclusive correspondent lenders just locked a grocery-anchored 50% LTV 10/30 loan at 5.85% on a 10/25 basis.

The life lenders who have reduced their rates want to pick the best deals. They are seeking the cream of the crop before their competitors return to the market. Several large insurers are still out of the market, seeking direction and trying to rebalance their portfolios and reduce their real estate exposure. At NorthMarq, we maintain a live feed of real-time information nationwide to deliver current information on all of our more than 40 insurance company correspondents. Stay tuned and strap in.

Mark Scott is senior vice president and managing director of NorthMarq Capital in Parsippany. He can be reached at [email protected] The views expressed here are the author’s own.

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
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


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 © 2021 ALM Media Properties, LLC. All Rights Reserved.