SunTrust Banks, Inc
) entered into an agreement whereby SunTrust would fund
commercial real estate mortgages originated and managed by
MetLife Real Estate Investors. The agreement between MetLife and
SunTrust is designed for a 3-year period.
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Moreover, under the terms of the agreement, SunTrust would invest
up to $5 billion for these loans.
In Oct 2012, MetLife launched a third-party asset management
business in order to capitalize on its expertise in private asset
sectors comprising real estate equity, commercial mortgages and
private placement debt. Moreover, the business focuses on the
creation of investment opportunities which would help generate
attractive and long-term returns for its institutional investors
that consists of insurance companies, public and private pension
plans and sovereign wealth funds.
In recent months, the economic recovery drove the demand for U.S.
commercial real estate. This resulted in investors preferring
higher yields from properties over U.S. Treasuries, which
provides fixed income. This resulted in SunTrust entering into
the strategic alliance with MetLife in order to provide its
clients with top-quality investments with attractive returns.
As of Dec 2012, commercial mortgages comprised about 75% of total
mortgages held as investment by MetLife. Moreover, the largest
percentage of these commercial mortgages was concentrated in the
South Atlantic states.
The strategic alliance between SunTrust and MetLife is expected
to diversify the loan portfolios of both the companies since
SunTrust would consider loans from all regions that would be
invested in mortgages for properties on the U.S. East Coast.
This, in turn, will reduce the concentration risk.
Currently, MetLife carries a Zacks Rank #2 (Buy) while SunTrust
carries a Zacks Rank #3 (Hold). Other stocks that are worth
considering in the financial sector include
Enterprise Financial Services Corp
First Interstate Bancsystem Inc
) with a Zacks Rank #1 (Strong Buy).