In a hefty commercial mortgage-backed securities transaction, BANK 2019-BNK22 is preparing to launch a $2.3 billion deal secured by 58 CRE loans on a wide mix of properties, including co-ops, offices and multifamily.
While the fundamental collection of properties is diverse across geographies and property types, offices and self-storage properties account for the two top property types, by pooled trust balance. Offices, for instance make up 41.8% of the pooled trust balance, and self-storage is the next highest with 13.9%, according to S&P Global.
The 22-tranche deal uses an eligible vertical residual interest to comply with risk retention requirements. Interest from the last class, VRR, provides credit support by allocating a portion of any losses incurred on the underlying mortgage loans to the class VRR interest and the certificates, on a pro rata basis.
Among rating strengths, S&P Global noted that the transaction has a strong concentration of properties in primary markets and strong MSA, in particular, such as New York, Washington and San Francisco. Forty loans have borrowers that are structured as special-purpose entities, and 14 loans provided lenders with non-consolidation opinions.
Forty of the loans have a form of a lockbox. Also, two loans are structured with in-place cash management. Ten of the loans, with represent 31% of the pooled trust balance, are secured by multiple properties, which might help reduce their net cash flow volatility.
The deal is expected to close on Nov. 14, and seven of the 22 tranches had preliminary ratings. S&P Global gave ‘AAA’ ratings to all of the first six classes, and ‘AA+’ to the A-S class.
The pool has a notable exposure to retail properties, with 45 serving as collateral on nine loans, according to S&P Global, which issued preliminary ratings. Retail’s composition in the pool balance, however, comes to 5.4%, between anchored and unanchored retail.
Seven loans are secured by a single property leased to a single tenant, and they make up about 23% of the pooled trust balance. Each of the seven leases has terms that exceeded the maturity date of the related loan.
A couple of notable single-tenant properties are the Park Tower at Transbay, a 43-story skyscraper leased to Facebook Inc. with a $115 million mortgage, and expiration dates of February 2033 and February 2034. Another, 127 West 25th Street, is a 12-story building leased to the Bowery Residence Committee, a chemical dependency intervention center in New York, with a $61 million mortgage.
MetLife and TF Cornerstone Properties IIC make up the largest representation among the borrowers, 9.6% and 9.2%.
