Life-company and CMBS proposals may differ in leverage, reserves, prepayment, property requirements and timing. Compare options that fit the property and ownership plan.
Side-by-side at a glance
| Dimension | Life co | CMBS |
|---|---|---|
| Typical loan size | $10M to $300M+ | $5M to $300M+ |
| Asset focus | Stabilized industrial, retail, MF, selectively office | Stabilized non-MF middle-market |
| LTV ceiling | 50% to 65% | 60% to 75% |
| Recourse | Non-recourse with carve-outs | Non-recourse with carve-outs |
| Prepayment | Yield maintenance + open window | Lockout + defeasance + open window |
| Term | 7/10/15/20-year | 5/7/10-year |
| Amortization | 25 to 30 year | 25 to 30 year |
| Closing certainty | Very high (rare re-trades) | High (occasional re-trades on conduit pricing) |
| Process timeline | 75 to 120 days term sheet → close | 60 to 90 days |
When to consider life co
Life companies and CMBS lenders can offer different leverage, prepayment and reserve terms. Compare their actual proposals on the same property and assumptions.
Long-dated terms. Life co will write 15- and 20-year terms; CMBS rarely goes beyond 10. For sponsors who value the longest-dated execution, life co wins.
Sponsors who prioritize closing certainty. Life co re-trades are rare; once a term sheet is committee-approved, the deal closes on the original terms.
Properties with operating histories or lease structures that fit life co preferences (single-tenant credit, long WAULTs, irreplaceable industrial).
When to consider CMBS
Higher leverage (65% to 75% LTV). Life cos cap below this; CMBS regularly executes at 70% to 75% LTV on the right asset.
Properties that don't fit life co preferences, broader middle-market retail, mixed-use, hospitality with proven flag, self-storage. CMBS credit boxes are wider.
Speed. CMBS closes 15 to 30 days faster than life co on average.
Specific weeks when conduit spreads are tight and CMBS quotes inside life co at the same leverage.
Prepayment trade-off
CMBS uses defeasance: replace collateral with Treasury portfolio. Expensive when rates are below the loan rate (most of 2024 to 2026 environment); can be cheap or positive when above. Hard transaction costs $40K to $80K on top of the economics.
Life co uses yield maintenance: present-value gap calculation. Generally somewhat cheaper than defeasance when rates are below the loan rate (no Treasury bid/ask, no securities intermediary fees). Same direction of economics.
Both have open prepayment windows of typically the last 90 days. Borrowers who can plan refis to land in the open window avoid prepayment cost on either.
What you should do
On 50% to 60% LTV institutional product, life co usually wins. CMBS still worth a quote, but life co is the favorite.
On 65% to 75% LTV product, CMBS usually wins. Life co may not even quote at the higher leverage.
On hospitality, self-storage, or non-trophy retail, CMBS dominates. Life co engagement is selective.
Frequently asked questions
Are CMBS pricing and life co pricing actually comparable?
Yes, on apples-to-apples basis. Both are non-recourse, fixed-rate, similar amortization. The main differences are leverage ceiling (life co lower) and prepayment menu (defeasance vs. yield maintenance). All-in cost over the planned hold is the right comparison.
Why don't more sponsors use life co?
They do, but life cos cap leverage. Many deals need higher leverage than life co will provide; CMBS is the answer. Sponsors who can lever lower often prefer life co for the pricing and execution certainty.
Can I refinance from CMBS to life co at maturity?
Yes, at maturity, the property can refinance to whatever execution wins on the day. Existing-loan execution doesn't constrain future execution choice.
Sources
- Capital Markets Special Report: Insurance Industry CRE Mortgage Holdings · National Association of Insurance Commissioners (NAIC) · 2025-Q4
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Financial Stability Report · Board of Governors of the Federal Reserve System · 2025-11
- Treasury Constant Maturity Series (DGS5, DGS10) · Federal Reserve Bank of St. Louis (FRED) · weekly