September 30, 2009
PRIVATE MORTGAGES
RETURNS IMPROVE IN SECOND QUARTER 2009
Mortgages post best performance since fourth quarter 2007
BOSTON / September 30, 2009 – Private commercial
mortgages held by life insurance companies delivered a 2.25% total
return in second quarter 2009, the best quarterly performance since
fourth quarter 2007. Returns over the prior three quarters were
1.63% for first quarter 2009, -3.16% for fourth quarter and -2.08%
for third quarter 2008 according to the LifeComps Commercial
Mortgage Index.
Of total return in the second quarter, 1.68% was
income return and 0.57% was price return - the first price gain
since fourth quarter 2007. The positive price return resulted from
improved valuations which outweighed the
negative effect of higher treasury yields.
Despite second quarter performance, annual returns
remained in negative territory for the third consecutive quarter
with a -1.46% total return compared to -3.37% in first quarter and
-4.14% in fourth quarter 2008. Income return for second quarter was
6.74% and price return was -8.20%.
Office properties fared best for the quarter with a
2.67% total return followed by apartments at 2.47%, industrial at
1.81%, and retail at 1.75%. Over 12 months, office returns were
-0.75% compared to -1.44% for apartments, -1.50% for retail and
-1.71% for industrial.
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 6,400 with
an aggregate principal balance of approximately $85.0 billion and
market value of $77.8 billion. The weighted average duration is 4.1
years and average loan-to-value is 69.4%.
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.
CONTACTS:
For More Information on this Press Release
Northwestern
Mutual Media Relations, Northwestern Mutual
Phone: 800-323-7033
LifeComps Group
Michael Mannix, Director
Phone: 617-429-3047
