FOR IMMEDIATE RELEASE For more information:
  Northwestern Mutual Media Relations
  1 (800) 323-7033
  This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Commercial Mortgage Returns Improve in Second Quarter 2018

 

BOSTON, September 1, 2018 – Commercial mortgage loans held by life insurance companies posted a 0.32 percent total return in second quarter 2018, an improvement over first quarter’s performance of -0.77 percent, according to the LifeComps Commercial Mortgage Loan Index. Year-to-date performance was down 0.45 percent.

 

Income contributed 1.09 percent and price subtracted 0.77 percent in second quarter with negative price return mainly attributable to higher treasury yields.  The yield on the 10-year treasury increased 11 basis points over the quarter.  

 

The twelve-month total return dropped to 1.00 percent from 2.54 percent last quarter. Income contributed 4.42 percent while price subtracted 3.42 percent, the fourth consecutive quarter of price loss.  Treasury yields steadily climbed over the period with the 10-year treasury up 54 bps.  Tighter mortgage spreads partially offset the impact from treasury movement.

 

Of the four major property types, industrial performed best over 12 months with a total return of 1.16 percent followed by office at 1.14 percent, apartments at 1.03 percent, and retail at 0.53 percent.

 

Commercial Mortgage Loan – Total Return by Property Type
as of June 30, 2018

Property

Quarter

12 months

Apartments

0.28%

1.03%

Office

0.37%

1.14%

Retail

0.26%

0.53%

Industrial

0.38%

1.16%

All*

0.32%

1.00%

*Includes hotel, mixed use, and other commercial


About LifeComps

The LifeComps Commercial Mortgage Loan Index is the only published benchmark for the private commercial mortgage market based on actual mortgage loan cash flow and performance data which has been collected quarterly from participating life insurance companies since 1996. Active loans in the LifeComps Index number approximately 7,800 with an aggregate principal balance of $140 billion. The weighted average duration is 5.4 years and average reported loan-to-value is 51 percent.

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