Prudential Financial Inc., TIAA-CREF and Northwestern Mutual Co. provided $850 million in financing to Tysons Corner Center as life insurers add to bets on commercial real estate.
The 10.3-year loan has a 4.1 percent interest rate and will be used to refinance Macerich Co.’s 1.9 million-square-foot shopping mall in Tysons Corner, Virginia, according to a statement today from Newark, New Jersey-based Prudential. Each lender contributed $283.3 million.
Life insurers coping with historically low yields on bonds have been turning to mortgages, including retail property lending, as occupancy rates climb. The vacancy rate at U.S. malls fell to 8.2 percent in the third quarter from 8.7 percent a year earlier, Reis Inc. said this week. Asking rents rose to an average of $39.77 a square foot from $39.24, the New York-based research firm said.
“Tysons Corner is one of the most successful regional malls in the country,” said Elizabeth Velazquez, a director with Prudential Mortgage Capital Co. The location near Washington and the pending addition of 1.3 million square feet of mixed-use development “made this an extremely attractive transaction.” The expansion isn’t covered by the loan.
The mortgage capital business at Prudential, the second-largest U.S. life insurer, had more than $74 billion in assets under management and administration as of June 30, up by about $6 billion from two years earlier.
TIAA-CREF, led by former Federal Reserve Vice Chairman Roger Ferguson, provides retirement accounts for teachers and non-profit organizations. The New York-based company this year announced a venture with Norway’s sovereign wealth fund to invest in office buildings. Life insurers invest policyholders’ premiums before paying claims.
TIAA-CREF and Milwaukee-based Northwestern Mutual are both rated AA+ by Standard & Poor’s, the second highest score from the credit-ratings firm. Northwestern Mutual, which is owned by its policyholders, hired Ronald Joelson from Genworth Financial Inc. last year as chief investment officer.