A Detroit landmark that emblemizes the recovery of the city’s central business district is the centerpiece of a new $744.8 million commercial mortgage securitization sponsored by Wells Fargo.
A $70 million note on Ally Detroit Center, a 43-story skyscraper controlled by Quicken Loan founder and real estate investor Dan Gilbert, is the largest loan backing Wells Fargo Commercial Mortgage Trust 2017-C42.
The note is part of a $120 million loan on the property; proceeds will be used to repay a loan from Wells Fargo that funded Gilbert’s 2015 acquisition and Class A-makeover of the former One Detroit Center.
The revitalized downtown building, which went into foreclosure a decade ago during the financial crisis, was renamed after Gilbert recruited Ally away from its former headquarters at the nearby Renaissance Center.
The Ally building loan is among 37 in the WFCMT 2017-C42 portfolio, which are secured by 66 properties. Other major loans in the pool include a Class A New York office building in the Bronx borough that houses the City University of New York, a grocery-anchored shopping mall in Altoona, Pa., and a portfolio of 16 Bass Pro and Cabela’s retail stores in 10 states.
Twenty-one classes of notes will be issued in the transaction, according to Kroll Bond Rating Agency, with 13 receiving principal and interest payments. Six Class A super-senior notes have preliminary triple-A ratings, supported by 30% credit enhancement, according to a presale report issued Wednesday.
The loans in the pool are predominantly secured by office properties (49.4% of the pool), followed by retail (25.5%). California (16.3%) and New York (16.3%) have the largest concentrations.
Most of the loans are lightly seasoned (the aggregate remaining term average is 9.9 years on the 10-year loans), giving the portfolio and higher than average in-trust loan to value ratio of 101.4% (the third highest among 22 commercial mortgage-backed securitizations rated by Kroll in the past six months). Twenty-four of the 37 loans have LTVs above 100%.
All of the loans were originated and sold into the trust by Barclays, Starwood Mortgage Funding II, Wells Fargo and Rialto Mortgage Finance.