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MetLife's (MET) Unit Buys Property, Boosts Real Estate Presence

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MetLife, Inc.’s (MET - Free Report) institutional asset management unit, MetLife Investment Management (MIM), recently collaborated with Norges Bank Investment Management (NBIM) for purchasing Massachusetts-based office building — One Memorial Drive.

The transaction, valued at $825.1 million, involves acquisition of the office property by MIM and NBIM from Oxford Properties Group and a J.P. Morgan Global Alternatives-advised fund.

The recent move is in line with MIM’s ardent efforts of investing in high-quality commercial real estate assets located across strategic geographies and markets. The acquired property is an apt fit as it is located in a city, where office space demand substantially outpaces the supply and is full of trustworthy tenants across technology and life sciences industry. The acquisition of One Memorial Drive will be a significant addition to the company’s portfolio. Per CoStar, the latest transaction marks the biggest single-asset U.S. office deal so far this year.

Such moves by the subsidiary will strengthen MetLife’s presence across the commercial real estate market. Besides, the company will be able to generate long-term value for its real estate clients. NBIM, the asset management subsidiary of Norges Bank, seems to be a suitable partner for MIM in undertaking this endeavor — a record transaction across the U.S. commercial real estate industry. Both MIM and NBIM have been joining forces for nearly a decade with the sole target of investing in Class A office properties across significant U.S. markets.

It's worth mentioning that despite several volatilities stemming from the COVID-19 pandemic, MIM has left no stone unturned in undertaking investments for pursuing buyouts. Since the beginning of 2020, the company has invested $4.5 billion in acquisitions including the recent one. As of Jun 30, 2021, the gross value of total commercial real estate assets under management of MIM attained $106.6 billion.

The company continues to seek opportunities amid the commercial real estate sector, which seems to be time opportune. The pandemic dimmed the commercial real estate outlook as most offices were compelled to allow employees to work remotely amid the stringent lockdowns and travel restrictions imposed worldwide. This affected the demand for commercial real estate properties with most companies looking for shorter leases and lesser office spaces. Consequently, investment volumes across commercial real estate space started dropping.

Nevertheless, a recent CBRE Research report has provided a ray of hope to real estate investors. Per the aforementioned report, the real estate industry is likely to rebounce over the near term though it is not likely to attain the 2019-level. Factors such as accelerated economic recovery worldwide coupled with record low interest rates are likely to contribute to the recovery of the real estate market and boost investment figures in the days ahead.

Zacks Rank & Price Performance

Shares of MetLife, which carries a Zacks Rank #2 (Buy), have gained 56.8% in a year compared with the industry’s rally of 35.1%.

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Other Stocks to Consider

Some other top-ranked stocks in the multiline insurance space include CNO Financial Group, Inc. (CNO - Free Report) , Old Republic International Corporation (ORI - Free Report) and The Hartford Financial Services Group, Inc. (HIG - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CNO Financial, Old Republic and Hartford Financial have a trailing four-quarter earnings surprise of 26.12%, 59.51% and 37.53%, on average, respectively.