The rise of pension fund investments reflects the ever-changing commercial mortgage industry. This trend is playing out across some of the country’s largest markets.

By 2012, it wasn’t uncommon to see the nation’s largest pension fund operators begin to diversify their investments into commercial real estate. By and large, they favored high-end, class A properties that guaranteed a low-risk return on their investment. How these pension funds evaluated their role in the commercial real estate industry began to change as successful asset managers encouraged them to invest in a wider variety of real estate assets. Within the past few years, many of these companies have become major mortgage lenders themselves.
This shift was also driven by changes in the pension fund industry, particularly a lowering of expectations for future returns. Additionally, new qualifying criteria have made it easier for pensions to take bold chances in their investments while limiting future liabilities thanks to the current market’s friendly interest rates.

That’s why it’s no surprise that pensions have become such an important rising player in the commercial mortgage lending industry. This nationwide development is also an instructive example of how quickly businesses can turn commercial real estate opportunities into major payoffs.

The two largest pension funds in the country, the California Public Employees’ Retirement System (CalPERS) and The California State Teachers’ Retirement System (CalSTRS), showed major returns on their real estate holdings and investments in 2016, said to a report from CoStar. On the other side of the country, another pension fund, the Teachers Insurance & Annuity Association of America, has recently become Boston’s largest commercial mortgage lender, according to National Real Estate Investor. Another pension, the New York State Teachers Retirement System (NYSTRS) is also among Boston’s top ten commercial lenders.
What does this mean for the rest of the industry? Pensions are clearly interested in carving out and maintaining a niche in the commercial lending space. It would be a far cry to assume, however, that pension funds will threaten the banking industry anytime soon. This trend also speaks to the unpredictability inherent to the industry. Who knows what industry will make the next jump into commercial lending?

Can My Business Benefit From Making An Investment In Commercial Real Estate?

With a strong understanding of the market and an opportunity to invest in a potentially lucrative real estate asset, it makes sense for your company to consider the benefits of taking out a loan. Whether or not this investment pays off will be largely determined by the type of mortgage you decide to take out for your company. That’s why it pays to work with an experienced private lender who can provide loan terms that are specific to your company’s needs and long-term strategies.

Explore your company’s options for a flexible commercial mortgage

Whether you are building a new project from the ground up or investing in a fix and flip plan, the right funding will make all the difference. That’s why it pays to work with a lender that makes your company’s success a priority. You want a lender that makes recommendations based on your best interest, not the other way around.

Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:     (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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