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PRIVATE MORTGAGES GAIN IN THIRD QUARTER 2009

 

BOSTON - January 1, 2010 – Private commercial mortgages held by life insurance companies delivered a healthy 4.57% total return in third quarter 2009, improving upon returns of 2.52% in second quarter, 1.63% in first quarter, and -3.16% in fourth quarter 2008, according to the LifeComps Commercial Mortgage Index.

Of total return in the third quarter, 1.68% was income return and 2.89% was price return. The positive price return resulted from both improved loan valuations and lower treasury yields. Third quarter’s performance lifted the annual total return to 5.23% after three successive quarters of negative annual returns. Income return over twelve months was 6.82% and price return was -1.58%.

Retail outperformed other property types for the year with an annual total return of 5.84% compared to 5.80% for office, 5.25% for apartments and 4.83% for industrial.

 

Commercial Mortgage Loan
Total Return by Property Type as of 9/30/09
  Quarter 12 Months
Apartment 4.41% 5.25%
Office 4.56% 5.80%
Retail 5.25% 5.84%
Industrial 4.40% 4.83%
All* 4.57% 5.23%

*Inlcludes hotel, mixed use, and other commercial

 

About LifeComps

The LifeComps Commercial Mortgage Index is the only published benchmark for the private commercial mortgage market based on actual cash flow and collateral performance data which has been collected quarterly from participating life insurance companies since 1996. Active loans in the LifeComps Index number 6,200 with an aggregate principal balance of approximately $84.0 billion and market value of $79.0 billion. The weighted average duration is 3.9 years and average loan-to-value is 70.8%.

Since its inception, the LifeComps database has tracked individual cash flows on more than 18,000 loans with principal balances totaling in excess of $221 billion. More than 3,800 loans totaling $54 billion have been tracked from origination to disposition.

Participating life insurers include Allstate Life Insurance Company, CIGNA Investment Management, AXA Equitable, John Hancock, Nationwide, Northwestern Mutual, Principal Financial and Prudential Insurance Company of America. For more information, visit www.lifecomps.com.