BOSTON—Returns on commercial mortgage loans held by life insurance companies made a strong recovery in the third quarter of 2015, LifeComps said Friday. The LifeComps Commercial Mortgage Loan Index posted a 1.62% total return in Q3, rebounding from Q2's negative 1.23% performance. The LifeComps index currently encompasses 4,500 loans with an aggregate principal balance of $103.7 billion.
Income return across the index was 1.21%, while price added 0.41% during Q3. LifeComps says the value increase resulted from lower yields on Treasuries with terms over two years, which more than compensated for the negative effect of wider mortgage spreads. The yield on the 10-year Treasury declined 29 basis points during the quarter.
The 12-month total return rose to 4.23% from 3.28% in Q2. Annual income of 4.98% was offset by a price loss of 0.75%, due to wider credit spreads that drove values down despite lower yields on longer term Treasuries. The 10-year Treasury yield ended the period 46 bps lower on a year-over-year basis.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
