CMBS

The underlying mortgage is a two-year, floating-rate commercial mortgage loan that is slated to mature on Dec. 9, 2025, and the loan has three one-year extension options.

Just two of the loans have existing additional debt, representing 11% of the pool. The pool has an in-trust appraisal loan-to-value ratio of 54.5%. On a pooled trust basis, the deal has an LTV ratio of 81.5%.

Full-term, interest-only loans account for 98.4% of the pool, while just two loans, or 1.6% are financed with an amortizing balloon. Analysts expect a cap rate of 9.19% capitalization rate to the underlying properties.

The market appears strongly divided, as commercial real estate presents investors with stark choices and big risk-management decisions, often differing by region and by sub-sector.

After weathering a barrage of industry shifts, weaker office fundamentals also mean special servicing has increased on office CMBS pools.

With uncertain outlooks surrounding the economy and interests, investment managers looking for safer fixed-income investments are finding underpriced assets.

The issuer underwriting (UW) rent for data center space is about 17.9% below the sponsor's market rent estimates, leaving potential opportunities for further rent revenue increases.

KBRA estimates that the property has a net operating income of $101.4 million; a 7.25% cap rate, and an in-trust debt service coverage of 1.18x at term Secured Overnight Financing Rate (SOFR).

PHH Mortgage will service all of the loans in the pool, for an annual fee of 0.20%. For its part, Velocity will act as special servicer on loans that become delinquent for more than 60 days or default.

With 24 sponsors, the collateral pool comprises mostly full-term interest-only loans, 97.4%. Otherwise, amortizing balloons make up the next highest percentage of loans, at 2.6%.