Altogether, mortgages returned 2.51% on the year
BOSTON, April 14, 2016 /PRNewswire/ — Commercial mortgage investments owned by life insurance companies posted a fourth quarter total return of negative 0.04 percent, concluding an uneven year.
The down performance followed a gain of 1.62 percent in third quarter, loss of 1.23 percent in second quarter, and gain of 2.17 percent in first quarter. Altogether, mortgages returned 2.51 percent for the year, according to the LifeComps Commercial Mortgage Index.
In fourth quarter, income contributed 1.24 percent while price deducted 1.28 percent. The price loss stemmed from higher Treasury yields while credit spread movement lessened the impact. The yield on the 10-year Treasury increased 21 basis points over the quarter, ending the period at 2.27 percent.
For the twelve-month period, income contributed 4.95 percent while price subtracted 2.44 percent. The negative price performance resulted from credit spreads that widened over the year, outweighing a net positive contribution from Treasury yield movement.
Of the four major property types, industrial loans performed best for the quarter and year with a total return of 0.10 percent and 2.62 percent, respectively.
Commercial Mortgage Loan – Total Return by Property Type as of December 31, 2015
Property | Quarter | 12 months |
Apartments | 0.03% | 2.44% |
Office | -0.21% | 2.57% |
Retail | -0.08% | 2.30% |
Industrial | 0.10% | 2.62% |
All* | -0.04% | 2.51% |
*Includes hotel, mixed use, and other commercial
