MetLife (MET) Unit’s Commercial Real Estate AUM Grows to $106.7B
MetLife, Inc.MetLife Investment Management’s (MIM) institutional asset management unit, MET, recently announced that it had completed new commercial real estate debt and equity transactions worth $ 10.7 billion in 2020.
On the one hand, 137 commercial mortgage loans of $ 8.5 billion resulting from the creation and institutional investor activity resulted in total commercial mortgage loan assets under management (AUM) reaching a gross market value of $ 74 billion by the end of December 2020.
On the flip side, MIM’s robust real estate platform and strong risk management capabilities have paved the way for communities to offer real estate finance and investment assistance. In this instance, the MetLife unit bought $ 2.2 billion in real estate last year, bringing the AUM of MIM’s entire real estate stock portfolio to a gross market value of $ 32.7 billion. In particular, MIM has for a number of years been pursuing a strategy of increasing the focus on property types that include last mile distribution centers and suburban apartments.
Additionally, MIM’s international portfolio has grown with the surge in commercial real estate AUM achieved over the past year thanks to its commercial real estate platform and wealth management functions in the US and in several international markets in the UK, Japan, Korea, Chile and the US Mexico. While MIM generated more than US $ 843 million in commercial real estate transactions in Asia in 2020, the UK recorded commercial real estate debt of US $ 527 million over the same period.
The above debt and equity leverage activities have resulted in MIM’s commercial real estate AUM reaching a global gross market value of $ 106.7 billion as of December 31, 2020.
It should be noted that the volatile markets as a result of the COVID-19 pandemic affected the risk appetite of investors who wanted to hold cash reserves rather than investing them. As a result, there was significant pressure on market liquidity in the early stages of the pandemic. The pressure gradually eased as central banks and governments took steps to inject liquidity into the economy, starting with interest rate cuts. During this early phase of the pandemic, MIM continued to act as a flow of leverage in the commercial real estate market to support borrowers. Specifically, MIM raised $ 15.7 billion in private placement debt in 2020, spanning 215 transactions, bringing the value of MIM’s total private placement debt and privately structured loan portfolio to $ 102.1 billion by the end of 2020.
The story goes on
According to MIM, the robust real estate platform has helped the company somewhat in tackling the challenges of the COVID-19 pandemic. That being said, MIM also believes the same platform is well positioned to take advantage of growing opportunities this year as well.
This Zacks Rank # 3 (Hold) multiline insurer’s stocks are up 97.2% in a year, compared to the industry rally of 69.7%.
In addition, these origination activities carried out by MIM have given MetLife’s asset management business additional impetus. Much like its subsidiary MIM, MetLife has endeavored to reduce the financial burden on its members through its proven expertise in dealing with longevity risks and its strong presence in the reinsurance space. The company continuously pursues reinsurance contracts that focus on risk sharing, reducing risk exposure and limiting losses suffered.
Shares to consider
Some better-rated stocks in insurance are there Old Republic International Corporation ORI, James River Group Holdings, Ltd. JRVR and First American finance company FAF. While Old Republic has a Zacks Rank 1 (strong buy), James River Group and First American Financial currently have a Zacks Rank 2 (buy). You can see The full list of today’s Zacks # 1 Rank stocks can be found here.
Old Republic, James River Group and First American Financial have a four-quarter earnings surprise averaging 65.77%, 11.63% and 15.86%, respectively.
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