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COMMERCIAL MORTGAGES POST 14.65% RETURN IN 2010
BOSTON / May 31, 2011 – Commercial mortgage investments held by life insurance companies ended 2010 up 14.65%. Fourth quarter’s total return of 1.04% followed gains of 4.01% in third quarter, 4.64% in second quarter, and 4.25% in first quarter, according to the LifeComps Commercial Mortgage Index.
For the fourth quarter, income contributed 1.54% and price contributed -0.50%. The price loss - the first experienced since first quarter 2009 - was driven by higher treasury yields which outweighed the positive effect from tighter spreads.
Of total return for the year, 6.48% was income and 8.17% was price, with the value increase attributable to an overall tightening of credit spreads and decline in treasury yields over the period.
Of the four major property types, apartments performed best over twelve months with a total return of 17.02% compared to 15.85% for retail, 13.92% for industrial and 12.30% for office.
|Commercial Mortgage Loan
Total Return by Property Type as of 12/31/10
*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 over 6,100 with an aggregate principal balance of approximately $92.7 billion and market value of $95.2 billion. The weighted average duration is 3.89 years, and average reported loan-to-value is 64 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, AXA Equitable, John Hancock, Nationwide, Northwestern Mutual, Principal Financial, Prudential Insurance Company of America, and TIAA. For more information, visit www.lifecomps.com.