CMBS

Potters, who has headed CMBS businesses at SocGen and Merrill Lynch, will focus on digital and automated commercial real estate loan securitizations.

Key retail vacancies, a drop in office occupancies, plus a combination of lower oil prices, a housing market oversupply — worsened by the coronavirus pandemic — caused loan-level performance issues.

On any semi-annual payment date, the notes will pay on a pro rata basis if a loss trigger event is in effect. If a loss trigger event exists, the notes repay sequentially.

Some 75% of the loans, or a count of 38, are partial term interest-only (IO) loans, and just six, or 22.9% of the pool are full-term IO loans. Just one loan, has an amortizing balloon.

Private label commercial real estate (CRE) securitizations may end up at $149 billion - more than double 2020’s volume of $62.2 billion.

The sponsors got the portfolio through multiple acquisitions from May through October.

The loan pool’s volatility score is high but its diversity of properties is a plus.

Benchmark will issue 21 classes of certificates, with 13 entitled to principal and interest payments. Six classes will receive interest only.

The problem loans mature right around when tenants in the offices are due to renew — or end — their leases. That may unsettle investors in commercial mortgage-backed securities, analysts at Moody’s Analytics warned this week.

Appraisals of troubled malls that were bundled into CMBS show property valuations going lower and lower. Capitalization rates are getting higher and higher.