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The state of the commercial real estate finance business is difficult to describe, but if we had to use one word, it would be volatility. While financial conditions have improved since the first half of the year, there are still plenty of challenges ahead. With a new president and likely a new Federal Reserve chair on the horizon, we can confidently say that volatility will remain a key factor in financial discussions for the foreseeable future.
The G-L 2 High-Yield Real Estate Debt Index posted an impressive 2.53% total return for the third quarter of 2024, up from a revised 1.06% return in the previous quarter.
- The G-L 2’s rolling 12-month total return as of September 30, 2024, was 7.5%.
- We have developed and are currently beta-testing a sophisticated attribution analysis report.
- G-L 2 credit events rose from 1.53% in the second quarter to 2.34% in the third quarter. This is not surprising, as credit events tend to be lagging, not leading, indicators.
- Turning to the G-L 1 Index, which tracks fixed-rate, lower-leverage transactions, lending volume has rebounded and is now significantly higher than in 2022 and 2023, though still below the record levels seen in 2021. We expect this year’s volume to be on par with 2020.
The Giliberto-Levy Indexes
The G-L Commercial Mortgage Performance Index or G-L 1 tracks investment results for fixed-rate senior mortgages made by lenders such as life insurance companies, GSEs, pension funds and investment managers and held on their balance sheets. G-L 1 has been produced continuously since 1993, with a return inception date of January 1, 1972.
The G-L High-yield Real Estate Debt Index or G-L 2 measures performance for a variety of investments, such as mezzanine loans, leveraged whole loan and B-notes. G-L 2 production started in 2018. The return inception date is January 1, 2010.
To receive more information about the indexes, please contact Julia Grant (jgrant@jblevyco.com).
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