Life Companies See 1% ROI on Commercial Mortgages in 3Q13


Life insurers got a 99 basis point return on investment from their commercial mortgage loan portfolios in the third quarter, reversing about half of the 192 bp 2Q13 loss.

For the year-to-date, there has been a 103 basis point positive ROI, helped by a 199 bp profit in 1Q13, according to the LifeComps Commercial Mortgage Loan Index.

Income made up 132 bps of the 3Q13 return, but price reduced ROI by 32 bps. The loss in price was due to higher yields on treasuries with maturities greater than five years.

The 12-month moving total return is 290 bps, down from 424 bps at the end of 2Q13. Higher treasury yields are to blame for this, LifeComps said.

By property type, loans securing industrial properties had the highest ROI, 144 bps, followed by office at 101 bps. Retail and multifamily both were at 77 bps.

Separately, the universe of loans supporting commercial mortgage-backed securities has a price gain of 40 bps in November from October, according to DebtX.

The estimated price as of Nov. 30 is 92.7%, up from 92.3% on Oct. 31 and 84.9% on Nov. 30, 2012.

The weighted average monthly price of impaired performing conduit loans fell to 78.9% from 79.1% in October. Nonperforming loan prices fell to 48.8% from 50.2%.

The Loan Liquidity Index hit 107.5 in November, up from 105.7 in October.

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