After a relatively quiet start to the week, commercial mortgage securitization is back on. Two deals began marketing Thursday that will offer over $1.2 billion of securities.
JP Morgan lined up the next large-loan, floating-rate transaction. JPMCC 2014-FL6 is collateralized by 13 with a combined principal balance of $504 million. All of the loans are structured with a two-year term and three one-year extension options.
The deal is backed 40 properties, mostly hotels, according to Kroll Bond Rating Agency. Hotels make up 47.3% of the portfolio, while office properties and retail account for 34.8% and 13.4% of the portfolio, respectively.
The loan collateral is located in 12 states, four of which represent more than 10.0% of the pool balance: Florida (21.9%), Texas (12.7%), Georgia (11.1%), and Washington DC (10.5%).
Kroll noted in the presale that the loan-t-value ratios of loans in the pool ranges from a low 54.5% to a moderate 85.1%, with a weighted average of 70.0%
Each of the properties also has additional debt in place in the form of mezzanine financing, which raises the pool’s weighted average LTV to 127.6%, and ranges from 104.0% to 156.2%. Higher leverage implies lower borrower equity levels and higher default probability.
Separately, Wells Fargo and Royal Bank of Scotland began marketing WFRBS Commercial Mortgage Trust 2014-C25. The conduit will offer $775 million of securities that are backed by 59 loans, secured by 73 commercial and multifamily properties.
Moody’s Investor Service and DBRS assigned preliminary ratings to the deal.
Several of the loans in the pool have a high level of refinance risk, DBRS noted. Twenty-two loans, representing 48.0% of the pool, have DBRS Refi debt service coverage ratio of less than 1.00x; 10 of these loans have Refi DSCRs of less than 0.90x.
Four loans representing 20.5% of the pool (including two in the top 10), pay only interest for their full term. An additional 27 loans, representing 52.0% of the pool, pay only interest for periods ranging from 12 to 66 months.
