Following positive gains of 0.26% in the second quarter of 2008 and 0.82% in the first quarter of 2008, private commercial mortgages held by life insurance companies posted a -2.08% total return for the third quarter, according to the LifeComps Commercial Mortgage Index.
Of total return in the third quarter, 1.61% was income return and -3.69% was price return. The negative price return resulted from higher mortgage spreads and lower valuations, which overrode the positive effect from lower treasury yields.
For the 12 months ending Sept. 30, 2008, total return was positive at 2.06%, of which 6.51% was income return and -4.45% was price return. The property type with the highest total return over the prior 12 months was office, with a 2.34% return. Retail and apartment had the lowest total returns, with 1.85% each; however, retail fared slightly better than apartments on a quarterly and year-to-date basis.