Friday, November 11, 2011

Life Companies Stepping Up Commercial Lending

Life insurance companies are stepping up their allocations for commercial mortgages as banks have cut back on lending. That’s according to The New York Times, which highlighted this trend in an October article. According to the article, life insurance companies funded $15.7 billion worth of commercial mortgages during Second Quarter, the highest quarterly volume since 1965, when the American Council of Life Insurers began tracking this data.

The article highlights the advantages life insurers have in providing funding. They generally underwrite conservatively, meaning lending only to more credit-worthy borrowers and on quality, well-located properties. They keep loans on their balance sheets, in contrast to investment banks, which issue bonds against the loans.

Life companies also generally offer lower rates than banks on a non-recourse basis, and their portfolios tend to do well because of their conservative lending and active management. For instance, Fitch Ratings said that at the end of 2010, 99.6% of life insurance company mortgages were in good standing.

NBS Financial has cultivated relationships with life companies since our company was founded in 1932, and today we have relationships with more than 50 life insurance lenders. These lasting relationships allow us access to billions of dollars to fund all commercial property types. We also offer in-house loan servicing, and take great pride in the quality and performance of our $1.65 billion loan servicing portfolio.

In addition to representing life insurance company lenders, NBS Financial Services has represented banks, conduits (CMBS), pension funds and private equity. With access to various lending sources, NBS Financial has the ability to finance the entire capital stack.

Though today’s interest rates are historically low, the commercial mortgage market can change rapidly. Call your NBS Financial Finance Offi cer today to find out more about financing your commercial property.