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Ally Detroit Center loan highlights $744.8M Wells CMBS

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.

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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.

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CMBS Kroll Bond Rating Agency Ally Financial
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