A10 Capital, a commercial mortgage lender specializing in mini-perm, or bridge loans, plans to issue $124.6 million in commercial mortgage bonds
The loans have three-to five-year terms and are used to finance properties until they are fully stabilized. The collateral of the underlying loans consists of traditional property types of office, retail, industrial and multifamily.
DBRS has assigned preliminary ratings to the deal, A10 Term Asset Financing 2014-1. The class A-1 and A-2 notes are rated AAA’; the class B notes are rated A’; the class C notes are rated BBB’; and the class D notes are rated BBB’.
The trust will also issue $7.7 million of notes that will be retained by the issuer. These notes consists of the BB’-rated, class E notes and the B’rated class F notes.
The pool consists of 18 loans, varies between fixed-rate, floating rate and fixed/floating hybrid and are secured by 30 commercial properties.
According to the presale report, two of the larger loans in the pool, Norris Tech and Oak Creek Tech, are secured by properties that have no net cash flow and correspondingly, low DBRS term debt service coverage ratio.
“Tenants have recently vacated both of these properties, resulting in depressed occupancy rates,” DBRS stated in the report.
There is some take-out financing (longer-term financing) risk for the properties. However DBRS noted in the presale report that "if the sponsors are unable to find takeout financing upon maturity, the special servicer should be in a good position to dispose of the assets with minimal loss severity."