Commercial mortgage loans held by life insurance companies delivered a 2.79% total return in the second quarter, improving over the prior two quarters' returns of 1.72% and 1.04%, respectively, according to the LifeComps Commercial Mortgage Performance Index.
Treasury yields fell in the second-quarter after two consecutive quarters of increases. The downward shift in the yield curve outweighed the negative effect of valuations to drive a second quarter price return of 1.30%, LifeComps reports. Income return for the second quarter was 1.49%.
Despite second-quarter gains, the rolling 12-month return fell for the fourth consecutive quarter to 9.89% as higher-return quarters rolled out of the calculation. Income contributed 6.21%, and appreciation contributed 3.68%, with annual performance benefiting primarily from changes to the yield curve and, to a lesser extent, tighter spreads compared to one year ago.
Of the four major property types, apartments performed the best over 12 months, with a total return of 11.03%, compared with 10.02% for industrial, 9.18% for retail and 8.93% for office, LifeComps says.
