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  • Writer's pictureJeff Wilcox

Why Life Companies Like Mixed-Use With Multifamily

Urban planners are always looking for the perfect combination of multifamily, mixed-use, office, retail and hotel assets to form an urban core that meets the needs of its constituents during all hours of the day.

When designed correctly, the various uses elevate the performance of each individual asset class in symbiotic fashion. However, especially in the case of mixed-use assets, the multifunctional uses generate a mixed-income stream that can limit access to some of the preferred multifamily lenders, most importantly the agencies and banks, which struggle to meet the needs of a mixed-use borrower. But options exist.

Mixed-use properties anchored by multifamily have substantially outperformed mixed-use properties without multifamily in the current market cycle. This has not escaped notice by life company lenders, which have stepped in to fill a niche for borrowers looking for best execution.

Gantry recently secured two $100 million-plus loans from life company lenders funding mixed-use projects anchored by a multifamily use, one as permanent financing and the other in a construction-to-permanent format. While both these properties exhibited unique challenges in underwriting due to the hybrid mix of cashflows and future performance expectations, in each situation the strength of the project’s multifamily elements, long-term market fundamentals and commitment of sponsorship led to attractive debt solutions.

Considerations for qualifying life company financing for a mixed use property include the following factors:


Life company lenders are hesitant to move beyond a 60 percent to 65 percent LTV for their loans, so accurate asset valuation is key. In the case of a recent existing development featuring both multifamily and hotel uses, occupancy and performance of the multifamily component provided a reliable income stream that allowed the asset to successfully navigate the post-COVID disruptions to its hotel operations. For the construction-to-permanent financing, the clear market demand for multifamily housing and low vacancies shored up underwriting for an asset that had a large office component that was going through lease-up. In both situations, life company lenders stepped up with extremely attractive loan terms that secured non-recourse financing on a fixed-rate basis despite some of the underwriting challenges.


The strength of a borrower resume, especially post-COVID, is very important when it comes to wooing life company lenders to the table. How borrowers handle downturns and come out the back end is almost as important as the loan to value. Sponsors who were able to weather the storms while maintaining strong capital positions and relationships were able to tell a story that opened doors to new lender relationships.


Multifamily-anchored mixed-use assets allow owners to capitalize on high upside rents from well positioned retail, hotel or office income streams while providing a reliable income anchor from the multifamily units. This allows owners to maximize their income upside with high variable rental streams in a portion of their asset, but it poses an underwriting concern for lenders given the uncertain or higher risk aspect of that cash flow. Life company lenders are well versed in all asset types, so they are comfortable with analyzing a diverse rent roll and providing positive leverage on all aspect of the asset’s revenue streams. This is a major differentiator for life companies, as other lending sources may have difficulty underwriting anything but the multifamily income stream, hamstringing borrower’s ability to borrow at the best terms.

Construction to Permanent

For projects in construction or set to begin construction, life company lenders are keen to lock in extremely aggressive pricing for well-located multifamily anchored mixed-use projects. Life companies do not have limitations around the percentage of income that must come from the multifamily aspect of the project like agency lenders do. This gives them more flexibility to underwrite diverse income streams across a variety of uses, something other lenders cannot do. When you combine their flexibility with their best-in-class fixed-rate pricing, life companies become one of the preferred lending routes for mixed-use construction to permanent requests.

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