Insurers Tackle $17B In Office Debt Maturities, Pivot To Multifamily And Industrial

Insurance companies will summit their $17B peak of office debt maturities in 2026, but the descent will take awhile, with 11-figure office maturities continuing through at least 2028. 

Early indications suggest that insurers are offloading much of that debt — the industry’s 2026 office maturities are spread across 904 loans, according to an analysis by banking market intelligence platform AtriumData.ai — and reallocating capital away from the sector and toward multifamily and industrial assets. 

“Almost every insurance company that we talked to sees commercial mortgage loans as positive from a risk-adjusted return perspective,” said Danny Kaufman, a senior managing director at JLL who sources debt for clients. “Their appetite for commercial mortgage loan credits is really significant.”

U.S. life insurers had $960B in total exposure to commercial real estate at the end of 2025, with 65% of that capital in commercial mortgages, according to estimates from Moody’s Ratings. That was up $20B year-over-year, in line with the recent 2% average annual increase. 

Like much of the rest of the capital markets world, insurers are shifting where they lend away from office loans. Office debt made up 18% of insurers’ commercial mortgage allocations by the end of 2024, down from just over a quarter of debt in 2020, and continued to decline last year, according to Moody’s. 

While some of that decline is from active management like note sales and foreclosure auctions, another chunk is coming from loans that have reached the end of their term and were refinanced elsewhere, said Evelyn Ocas Salazar, a vice president at Moody's Ratings. 

Private equity and other investment firms have been raising billions of dollars to target commercial real estate debt, with more money being raised each quarter, including from investors looking to target the best-in-market office buildings that corporate giants have piled into over the last 24 months. 

“A lot of the insurers have chosen not to get back into a new loan and let them find other alternative financing,” Ocas Salazar said.

Shorenstein executed an early example of this kind of deal in January with the refinancing of 50 California St., a 37-story office tower in San Francisco’s financial district. The neighborhood was the poster child for the challenges wrought on business districts by pandemic-era lockdowns but has recently begun to surge back as a hot spot for artificial intelligence firms.

The 663K SF office was backed by $192M in debt from Massachusetts Mutual Life Insurance Co. that, eight days before the maturity date, was refinanced by American National Insurance Co., an arm of Brookfield Asset Management since 2022, according to AtriumData.ai. The deal was a textbook example of an old-guard life insurer’s debt being replaced by alternative asset managers, AtriumData.ai founder Ryan Alfred wrote.

Insurers’ $17B worth of office debt maturing this year fits broadly into three buckets, he wrote. Properties like 50 California St., a top asset in a neighborhood that is still recovering from a pandemic-era exodus, fit into the middle category and are ripe to be picked off by alternative capital.

On one side of that group are early loan resolutions from strong sponsors that retire mortgages to take the property free and clear of debt. That is what Kilroy Realty Corp. did with Westside Media Center in Los Angeles, retiring a $145M note from Massachusetts Mutual 18 months before its December 2026 maturity date, according to AtriumData.ai.

The 380K SF office building has tenants like Hulu, Fandango and Kilroy itself, and the public REIT had the capital to pay down the debt, a best-case scenario. On the other side are the properties where collapsing fundamentals have left loans underwater, presenting real potential for losses.

“The maturity wall is navigable — for the right borrowers, in the right markets, with the right buildings,” Alfred wrote. “The losses, when they are eventually recognized, will be concentrated in the properties and markets where no amount of sponsor strength can overcome 35% vacancy and 50% value declines.” 

The losses that do come for insurers are likely to be relatively small and isolated to specific properties, Ocas Salazar said. Insurance companies have for more than a decade underwritten debt with conservative loan-to-value ratios, allowing valuations to swing significantly without wiping out their position. 

Loan extensions also remain a popular lever to pull when current debt markets, which have seen borrowing costs decline over the last year, don’t support a deal. While that may look similar to the widespread practice of pushing out loan maturities in the hopes of better interest rates in the near future — what has become known as extend-and-pretend — Ocas Salazar said this is different. 

“There's an appetite to keep that cash flow,” she said. “If you actually see a path for the borrower to work with you to get to a place where there's a potential for repayment, you're going to do it.”