IPD, the world-leader in commercial real estate index and performance analysis services, released the results of the Giliberto-Levy Commercial Mortgage Performance Index. The Giliberto-Levy Index, which tracks private-market loans held in investor portfolios, produced a 2.44% total return in Q2 2011.
This aggregate performance reflects a market-value-weighted blend of office, apartment, retail and industrial investments. The total sector return, which adds lodging and other property types, was higher at 2.52%, largely due to improved performance in the lodging sector.
"We are very pleased to have added the Index to our global suite of real estate indices and to include the long-standing industry thought leadership and resources of Michael Giliberto and John Levy to our team," said Simon Fairchild, Managing Director of IPD North America. "The Giliberto-Levy Index provides a unique source of disciplined insight into the commercial real estate debt industry and is particularly relevant for understanding today's volatile capital makets."
John Levy furthered the point by saying, "credit lossesnormally a lagging indicatorappear to be peaking, but that might turn out to be overly optimistic if the economy heads down again. The Index can be helpful in underwriting and measuring debt performance, especially when sectors such as the CMBS markets are exhibiting such volatility."
Michael Giliberto, co-creator of the Index, noted that "while the overall commercial lending volume in the most recent quarter surveyed was markedly greater than in Q1, activity has dropped off in recent months. We think this reflects increasing concern about the economy and uncertainty surrounding a US government credit downgrade."
The Giliberto-Levy Commercial Mortgage Performance Index, established in 1993, now has an almost 40-year time series history and measures the quarterly total return produced by a model portfolio of institutional-grade commercial mortgage whole loans. The Index is based on a $186 billion aggregate model portfolio that represents a thorough cross-section of fixed-rate, fixed-term loans made by institutional lenders.
The database provides the most extensive whole-loan data available, setting a robust and independent standard for monitoring the performance of US fixed-income commercial mortgage investments.