Life companies spreads narrow

By: James DuMars, Phoenix office managing director-NorthMarq Capital

The gloves are off as several life companies lowered their rates below 5% in order to compete for loans against Class A apartment communities and institutional industrial.  We’ve seen rates as low as 4.45% fixed for 10 years for low leverage loan requests on multifamily.  Let me emphasize that these are for large loans against Class A multifamily in solid locations across the US.  

However, the trend of narrowing spreads continues as life companies seek out opportunities to deploy capital on quality assets and multifamily is at the top of many companies’ lists of property types they’re underweight on.  It’s simply supply and demand and capital is piling up at the life companies as the agencies have been the dominant lending force the past couple years in the multifamily space.  The narrowing spread trend has also spilled over to the industrial sector as well for large low leverage loans in healthy markets.  One life company recently quoted 4.75% for a low loan request on an institutional quality industrial project.  This is a positive trend and one could deduce that it will eventually spread to other assets as competition to deploy capital mounts.

James DuMars, managing director/senior vice president for NorthMarq Capital’s office in Phoenix, has more than 20 years of experience resolving complex commercial financing issues. Contact James at (602) 508-2206 or [email protected]