National + Finance | May 15, 2020

Life Companies’ CRE Loan Portfolios Post Negative Returns

Commercial mortgage investments held by life insurance companies posted a -1.00% total return in the first quarter, which is down significantly from the reading of 0.55% in Q4 2019. Declining interest rates were unable to offset growing credit concerns.

The reading was 2.2% in Q3 2019, and 3.11% in Q2 of last year, according to the Trepp LifeComps™ Commercial Mortgage Index, which benchmarks commercial mortgage investments held by life insurance companies.

Of the four major property types, multifamily properties performed best over 12 months with a total return of 5.1%, followed by office at 4.9%, and both retail and industrial at 4.57%.

Income contributed 1.03% and price subtracted 2.04% in Q1, with the negative price appreciation primarily being driven by credit risk.

“Despite the significant drop in treasury yields, credit concerns materially pushed down the value of the loan portfolios,” said Russell Hughes, head of data consortia initiatives at Trepp.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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