BDS 2021-FL9 is preparing to issue about $746.6 million in collateralized-loan obligations (CLO), a multi-asset commercial real estate deal that will skew heavily to multifamily properties, and that will index to Libor.
Initially, the notes will be collateralized by 24 pari-passu participations, accounting for 82.4% of the notes; and there are seven whole loans, making up 17.6% of the deal, according to Kroll Bond Rating Agency, which plans to assign ratings to the notes.
All of the participated loans have a related unfunded future advance obligation, with an aggregate balance of $76.7 million. On a weighted average basis, the loans have about two months of seasoning.
Further, BDS 2021-FL9 features administrative carve outs that allow the collateral manager, Bridge Debt Strategies Fund Manager, LLC, to enact certain loan modifications that are not subject to the servicing standard.
Such modifications can include exit fees or extension fees, yield or spread maintenance provisions, reserve accounts, or the requirement of a borrower to obtain an interest rate cap agreement should they apply for an extension, KBRA said.
The typical CRE loan in the collateral pool is pegged to a multifamily loan based in Nevada. The largest property type is multifamily, accounting for 80.2% of the portfolio, while Nevada accounts for the state with the highest concentration of loans, 19.6%.
There are 31 loans on the pool, associated with 37 properties, said KBRA.
Other property types in the BDS 2021-FL9 collateral pool are office, 9.9%; industrial, 8.6%; and manufactured housing, 1.3%. BDS 2021-FL9 is allowed to be fully collateralized by multifamily or manufactured housing properties, although it has concentration limits on other property types.
Goldman Sachs & Co. is the sole structuring agent on the deal. Seven classes of notes, all of which are entitled to principal and interest payments, comprise the capital structure. Preferred shares will also be issued, which are solely entitled to receive monthly non-cumulative dividends on each payment date, to the extent that profits and share premiums can be distributed, KBRA said.
No ramp up is allowed on the deal, but the transaction does include a reinvestment period of 24 months.
J.P. Morgan Securities, Wells Fargo Securities, Amherst Pierpont Securities, Samuel A. Ramirez & Co., are placement agents in the deal, along with Goldman.
KBRA expects to rate the $418 million class A notes ‘AAA’, with ratings down to ‘B-’ on the class G notes. All of the notes are expected to mature in November 2038.
