(Bloomberg News) Hartford Financial Services Group Inc. Chief Investment Officer Gregory McGreevey, who slashed commercial-property holdings during the market slump, is betting on a rebound by expanding the insurer's real-estate financing.
"The real-estate market in total has likely bottomed in terms of its price declines," McGreevey said of commercial property in an interview at Bloomberg headquarters in New York yesterday. "Most of our opportunities are in direct whole-loan investments where we can find good properties at attractive prices."
U.S. commercial property values posted the smallest decline in three years in 2010 as the economy expanded and near record- low interest rates lured buyers. McGreevey, who managed $3.4 billion of commercial mortgage whole loans as of Sept. 30, said he's focusing on industrial properties and expects to find opportunities in the U.S. Midwest.
"Properties, we think, are in better shape today than they were," said McGreevey, who oversees more than $130 billion of investments. "The broad market has probably seen its worst days."
The Moody's/REAL Commercial Property Price Index slipped 2.1 percent in the 12 months ended Dec. 31 after falling 29 percent in 2009 and 15 percent in 2008. The index posted gains in three of the last four months of 2010. Hartford, based in the Connecticut city of the same name, rose 14 percent on the New York Stock Exchange last year.
Fixing Bad Bets
McGreevey, hired in August 2008 and promoted to CIO less than two months later, is seeking new investments after spending the first portion of his tenure paring bad bets made by his predecessor, Dave Znamierowski. McGreevey cut Hartford's holdings of commercial mortgage-backed securities by 36 percent in his first 27 months to $7.9 billion. He said he's done trimming CMBS and is now focused on underwriting new loans.
"Now that we're largely through the heavy lifting in our derisking, we're able to have that group focus their attention on putting new loans on the books," McGreevey said. "We like industrial properties, and we don't like office properties, as a generalization."
Prudential Financial Inc., the second-biggest U.S. life insurer, said today its mortgage-finance business closed $94 million of loans on 17 industrial properties in Southern California. MetLife Inc., the No. 1 life insurer, views commercial mortgages as "a very attractive sector," Chief Investment Officer Steven Kandarian said in December.
Profit Rebound
Hartford, which sells life insurance and property-casualty coverage, posted its first annual profit since 2007 last year as bond losses narrowed and the stock-market rally lifted the value of customer accounts. Book value per share gained as a surge in corporate bonds lifted the value of Hartford's portfolio.