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PRIVATE MORTGAGES GAIN IN FIRST QUARTER 2010
Annual return climbs to 13.99%
BOSTON / June 30, 2010 – Private commercial mortgages held by life insurance companies generated a 4.25% total return in first quarter 2010, boosting the 12-month total return to 13.99% from 11.1% last quarter. First quarter’s healthy performance followed gains of 2.25% in fourth quarter, 4.57% in third quarter, and 2.25% in second quarter, according to the LifeComps Commercial Mortgage Index.
Of total return in the first quarter, 1.62% was income return and 2.63% was price return. The price gain was driven by narrowing mortgage spreads which have continued their decline from the highs reached at year-end 2008.
Over 12 months, total return was comprised of 6.82% income return and 7.16% price return. Of the four major property types, office performed best over the year with a total return of 14.79% compared to 14.59% for apartments, 14.11% for retail and 12.91% for industrial.
|Commercial Mortgage Loan
Total Return by Property Type as of 3/31/10
*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 data, which has been collected quarterly from participating life insurance companies since 1996. Active loans in the LifeComps Index number 6,000 with an aggregate principal balance of approximately $80.5 billion and market value of $78.2 billion. The weighted average duration is 3.8 years, and average loan-to-value is 68 percent.
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, The Equitable, John Hancock, Nationwide, Northwestern Mutual, Principal Financial and Prudential Insurance Company of America. For more information, visit www.lifecomps.com.