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CRE Finance World, Winter 2012

CREFC Portfolio Lenders Forum Update Richard Coppola Managing Director TIAA-CREF Chair, CREFC Portfolio Lenders Forum T ship has been working diligently to produce a member - •Average reported portfolio loan-to-values did increase in theReported problem loans (which may include loans not currently90 days or greater in delinquency) has not exceeded 0.8% inthe current cycle and actually declined in 2010 from the levelsreported in 2009.•The Portfolio Lender Forum, under the leadership ofChair-Elect Todd Everett of Principal Real Estate Investors,has had a busy inaugural year seeking to deliver tangiblebenefits to its membership. To that end, the Forum leader survey that will establish a benchmarking tool for the life insurance economic downturn (from 56% in 2006 to around 66% in 2009) lending community. The express goal of the survey is to develop as property-level valuations on existing assets were adjusted. previously unavailable industry data regarding portfolio performance However, the negative drift appears to have been ultimately con- that can be used by participating members as it relates to rating trolled by the quality of assets, markets and investment structure. agency reviews and stress testing, as well as insurance regulator reviews of capital adequacy. The information requested will include •The average liquidity of near-term maturities held by insurance companies also appears strong, with an average reported debt all subsidiary entities within the insurance companies. yield of 13.6% for loans maturing in the next 12 months. The survey was distributed in the second quarter, with the results collected throughout the summer. Some 27 companies responded, The working group is pleased with the level of participation and the results of this initial survey and continues to work to improve the representing more than half the life insurance company mortgage market. The Forum leadership reviewed the results and released quality and reach of the effort. Generally speaking, there has been strong support from major life insurance companies to continue summary data to the participating members in September. The results will also be presented at the CREFC January conference. to develop this important and timely benchmarking tool. We have gathered five years of historical data and are in the process of As expected, the trend line data and portfolio performance metrics gearing up for the next survey to continue this effort on behalf of the industry. We have worked with the Life Mortgage and Real show that life insurance company loan metrics are significantly better than corresponding CMBS performance. During the height Estate Officers Council (commonly known as the Dutch Treat) to promote the survey among its membership and have engaged of CMBS issuance in the mid-2000’s, portfolio lenders generally maintained or even reduced the risk in their originations. However, ACLI to facilitate the next version, anticipated for distribution this spring. We realize that this is an iterative process and hope the without strong benchmarking data, rating agencies and other regulatory bodies rely on more readily available CMBS performance next version will continue to build on this early successful survey. data to analyze commercial whole loans held by insurance companies. The survey is meant to bridge the gap between CMBS data and This has been a strong effort to deliver on the promise to provide the Portfolio Lender’s Forum with tangible results and a meaningful portfolio lender actual performance. product for the membership. As a new Forum to the CREFC, we believe it is important to demonstrate the value of participation to Based upon the data submitted, certain trends have been confirmed: the members as we seek to grow the Forum membership. We believe •Realized losses at less than 0.50% in the general accounts and the survey is a step in this direction. We will seek to conduct a subsidiary entities of the participating companies. Losses appear banking version of the survey as we reach out to those institutions to be stabilizing at very controlled levels. to also expand their representation in the Forum. •The inclusion of non-insurance subsidiary entities did not materially elevate the level of average reported delinquencies, which are less than 0.30%, compared to the levels seen in ACLI reporting. CRE Finance World Winter 2012 76


CRE Finance World, Winter 2012
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