MetLife Inc. has issued information about its commercial mortgage-backed securities (CMBS) and commercial mortgage whole loans as of Sept. 30. The company says it is providing this information in light of the increasing volatility in the CMBS indices (CMBX), which is due to a number of factors, including two commercial mortgages within CMBX 5 that have been reported as likely to default.
MetLife states that its portfolio was structured to tolerate a downturn in commercial real estate fundamentals.
In response to aggressive underwriting and weak deal structures that characterized the market beginning in 2005, MetLife focused on the highest credit quality and older vintage CMBS and on the origination of moderate and low-leveraged commercial whole loans. The company believes it is important to distinguish between the CMBX and holders of individual securities.
MetLife currently holds approximately $15.9 billion of CMBS, of which over 95% is rated AAA/AA. The company has no direct exposure to the CMBX or any other CMBS-related derivatives.
MetLife has a $35.9 billion commercial mortgage portfolio with an average loan-to-value (LTV) of 57% based on the company's most recent valuations. Eight percent of the portfolio has an LTV above 75%, including only 2% above 80%.