Bank commits billions to back insurer's mortgage origination play

by Ryan Smith06 Aug 2013

SunTrust has committed as much as $5bn to back the country's largest insurer in its foray into commercial mortgage origination.

The bank will back a bid by MetLife to enter the commercial mortgage market. The funds will be released over three years, subject to approval of each loan, according to a MetLife news release.

MetLife started an institutional asset management business in October as it sought fee income that is less capital-intensive than its insurance coverage revenue, according to a Bloomberg report.  The company is currently in talks with potential clients to commit funds to the new real estate arm, Bloomberg reported.

As the economy recovers, demand for commercial real estate is climbing, according to Bloomberg. In May, the Moody’s/Real Capital Analytics national all-property index had recovered 53 percent of the losses it took between December 2007 and its low in January 2010, according to a July 10 report from Moody’s Investors Service.

MetLife and SunTrust hope to take advantage of that rising demand. “As the commercial real estate market continues to regain its footing, we are actively seeking opportunities that make sense for our clients, SunTrust and our investors,” said Walt Mercer, executive vice president and head of Commercial Real Estate at SunTrust. “This agreement with MetLife, a proven and well-respected real estate investment leader, satisfied all of our criteria and we look forward to its potential.”

“Our goal is to be one of the top five institutional real estate investment managers, and with this mandate from SunTrust, we are confident the company is headed in the right direction," said Robert Merck, global head of MetLife Real Estate Investors. “We will continue to offer institutional investors our market-leading origination platform, underwriting expertise and superior customer service to earn and retain their business.”


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