RICHMOND, VA—John B. Levy & Co. has unveiled a new version of the Giliberto-Levy Commercial Mortgage Performance Index, which has tracked fixed-rate, fixed-term senior loans since 1993. The Giliberto-Levy High-Yield Real Estate Debt Index, or G-L 2, reportedly is the first third-party measure available to monitor high-yield commercial mortgage debt performance.
The G-L 2 tracks the performance of $6.9 billion in high-yield loans—including second mortgages, mezzanine loans and preferred equity—dating back to January 2010 and representing a mix of property types. Over a seven-year period that ended this past Dec. 31, G-L 2 debt racked up a 7.6% average annual return, outpacing the 5.3% return achieved by the G-L Index over that same period of time.
Over the course of 2016, investments tracked in the G-L 2 produced a 9.4% return. For mezzanine loans specifically, the return was 10.4%.
In common with the G-L Index, GL-2 was co-created by John B. Levy, president of John B. Levy & Company, and investment manager Michael Giliberto. “Investors in high-yield real estate have long wanted to compare their returns and performance against an industry standard benchmark,” Levy says. “Our G-L 2 carefully crunches the numbers and variables within financing packages,” thus providing high-yield investors a level of insight that previously was available only to holders of senior debt.
Multiple categories of mortgages make up the G-L 2 index, with mezzanine loans (53%) and senior-B notes (32%) representing the largest two components. Others include second mortgages and preferred equity, and 62% of these are subject to adjustable or floating interest rates.
The G-L 2 is available on a subscription basis, and subscribers can customize report components to align with their given investment profiles. The G-L 2 results will be published quarterly, starting with 2017 results. Click here for further information.
The most recent quarterly results for the original G-L Index, issued in August, showed second-quarter results outpacing those of Q1. The index showed a 2.11% total return for Q2, compared to a total return of 2.01% in the first three months of this year.
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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.
