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PRIVATE MORTGAGES CONTINUE POSITIVE TREND IN FOURTH QUARTER 2009
Annual total return up 11.1%
BOSTON / March 31, 2010 – Private commercial mortgages held by life insurance companies generated a 2.25% total return in fourth quarter 2009, boosting total return for the year to 11.1%. The positive fourth quarter performance followed gains of 4.57% in third quarter, 2.52% in second quarter, and 1.63% in first quarter, according to the LifeComps Commercial Mortgage Index. In comparison, total return for 2008 was -4.1%.
Total return in the fourth quarter was comprised of 1.68% income return and 0.58% price return. The positive price return resulted from improved loan valuations which outweighed the negative effect of higher treasury yields.
For the year, total return was comprised of 6.89% income return and 4.23% price return.
Apartments outperformed other property types in 2009 with an annual return of 13.51% compared to 12.10% for office, 10.52% for retail and 8.98% for industrial.
|Commercial Mortgage Loan
Total Return by Property Type as of 12/31/09
*Inlcludes hotel, mixed use, and other commercial
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 over 6,000 with an aggregate principal balance of approximately $81.6 billion and market value of $77.1 billion. The weighted average duration is 3.8 years and average loan-to-value is 69%.
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 insurance companies 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.