Commercial mortgages held by life insurance companies delivered a 4.64% total return in the second quarter, lifting the 12-month total return to 16.65% from 13.99% the previous quarter, according to the LifeComps Commercial Mortgage Index, a benchmark for the private commercial mortgage market based on actual cashflow data.
The second quarter's positive performance followed gains of 4.25% in the first quarter, 2.25% in the fourth quarter of 2009 and 4.57% in the third quarter of 2009. Of total return in the second quarter, 1.60% was income return, and 3.04% was price return. The price gain resulted from lower Treasury yields and improved loan valuations.
The second quarter represents the fifth consecutive quarter of positive price performance. Over 12 months, income return was 6.74%, and price return was 9.91%.
Of the four major property types, retail performed best over the year, with a total return of 18.58%, compared to 18.19% for apartments, 16.05% for office and 15.05% for industrial.