More dollars from life insurance companies are flowing into CRE loans – Trade Observer
Life insurance companies have been active in commercial real estate lending over the past year and are poised for continued growth.
Active commercial real estate origination activity was evident in established insurance companies PGIM, MetLife and New York Life, while new players, namely KKR and Apollo, also joined the party with the addition of dollars from life insurance companies.
PGIM increased the amount of its US debt to $17 billion in 2021 from $16.2 billion the previous year. Its deal book was diverse, including $7.4 billion in portfolio and core business, $2.2 billion in core-plus and high yield as well as $7.3 billion in debt. agency.
One of PGIM’s notable transactions involved a $101 million floating rate bridge financing to Asana Partners for the acquisition and lease of a portfolio of four 168,206 square foot retail and office properties in the Fulton Market area of Chicago. The deal demonstrated PGIM’s versatility in executing a core-plus transaction that targets greater returns.
MetLife Investment Management also had a big 2021 with its commercial mortgage team behind a company record 235 deals last year totaling more than $15.3 billion across traditional property types. and alternatives. These included life sciences, self-storage and student housing. MetLife has also launched a closed-end hotel debt fund.
Overall, MetLife recorded $18.6 billion in new commercial real estate debt and equity transactions and hit a record high of $109.8 billion in gross commercial real estate assets under management.
New York Life real estate investors proved nimble in 2021 with $12.6 billion in deal volume from base, bridge, construction and mezzanine debt. It surpassed pre-pandemic levels of commercial real estate loans with $9.9 billion. Purchases of commercial mortgage-backed securities totaled $1.8 billion and New York Life closed $923 million in equity.
Seeking to grow from its transitional lending roots, KKR added insurance capital in February 2021 with the acquisition of life insurance and annuity company Global Atlantic. The move gives KKR more bandwidth to take out longer-term variable-rate and fixed-rate loans in addition to bridge debt.
Global Atlantic acquisition paid early dividends for Manhattan-based KKR with company quintupled its previous lending record, set in 2019, with $14.5 billion in loans from 120 transactions. The company expanded its lending reach with 60 new institutional borrowers. About half of its deal activity last year was devoted to the multi-family sector while allocating a sizable share to industrial deals.
The dynamics of commercial real estate lending at the life insurance level were also evident at Apollo. The firm closed $14.1 billion in issues last year, including $8 billion from its insurance company platform.
As Apollo and KKR continue to expand their insurance businesses in 2022, the insurance company industry’s presence in commercial real estate lending will only expand.