Commercial mortgage loans provided life insurers with a 1.99% total return on investment in 1Q13, up 14 basis points from 4Q12’s 1.85%, according to the LifeComps Commercial Mortgage Loan Index. ROI in 1Q12 was 1.56%.
Income contributed 129 basis points, while price contributed 70 bps. LifeComps said pricing benefited from a decline in mortgage spreads, which more than countered the rising interest rate environment during the quarter.
For the 12-month period from April 1, 2012 to March 31, the ROI was 7.94%, with income making up 5.55% and price 2.39%.
By property type, offices had the best ROI in 1Q13, at 214 bps, followed by industrial at 210 bps, retail at 198 bps and apartment buildings at 176 bps. For the 12 months ended March 31, retail had the best ROI at 825 bps with apartment buildings next at 813 bps. Office properties were next at 784 bps with industrial at 730 bps.
There are nearly 5,000 active loans in the LifeComps database with an aggregate principal balance of $93 million and market value of $102 million. The weighted average duration is 4.6 years and the reported loan-to-value ratio is 54%.