Life Insurance Company Commercial Loans

Life insurance companies invest premium dollars against long-dated policy liabilities, which makes long-term commercial mortgages an ideal asset for them: predictable, secured and matched to their liability duration. Because they hold these loans on their own balance sheets and answer to insurance regulators and rating agencies rather than a securitization market, life companies can offer the lowest fixed rates and the longest fixed terms available — but they select ruthlessly. They want institutional-quality real estate in strong locations with credit tenancy, low leverage and an experienced sponsor.

For a borrower who fits, the execution is exceptionally clean. Life companies are direct lenders with in-house real estate professionals, and they service what they originate, so there is a real person to call for the life of the loan. Terms of fifteen, twenty or even twenty-five years fixed are attainable, and early rate lock is often available. What a life company will not do is stretch leverage, accept a transitional asset, tolerate a weak sponsor or move quickly on an unrealistic deadline. When the deal fits, it is the best debt in commercial real estate; when it does not, it will not be forced.