Benchmark 2022-B32 is preparing to launch a $1.8 billion commercial mortgage-backed securities deal, with 47 mortgages on 171 properties, mostly office buildings, serving as collateral.
JPMorgan Chase Bank, Citi Real Estate Funding, German American Capital Corp, and Goldman Sachs Mortgage are underwriters on the transaction, as well as sponsors, mortgage loan sellers and originators, according to a presale report from Fitch Ratings.
The rating agency expects to assign ratings ranging from ‘AAA’ on the $6.4 million A-1 class to ‘B-’ on the $16.8 million H class.
Office properties account for 60.8% of the pool, above the 41.2% average for 2020 deals and the 36.5% average for 2021, Fitch noted. Issuers in the office subsector report a debt service coverage ratio (DSCR) of about 3.2x, while Fitch assigned a DSCR of 1.37. Issuers also generally report a loan-to-value ratio of 53.5%, while Fitch sets the LTV at 94.8%.
On a weighted average (WA) basis, the office properties have an occupancy of 93.5%. The office collateral also has a WA property market metric (PMM) score – which measures a loan’s historical market and cash flow volatility – of 3.3, and a WA cash flow variance of 13.8%.
After the office sector, retail properties account for 12.6%, which was actually a drop from the 2020 average of 16.3% and the 2021 average of 21.8%, Fitch said. As for the other representative property types, self-storage comprises 8.6% of the pool; industrial accounts for 7.5%; the hotel sector comprises 5.7% and the multifamily sector accounts for 3.4%, according to Fitch.
The average loan size in the pool is $37.8 million, and the 10 largest loans in the collateral pool account for 51.7% of the pool, according to Fitch. About 17.8% of the pool have an investment grade credit opinion.
On a WA basis, the original loan terms are 99.1 months, and 1.3 months of seasoning. A substantial majority of the loans, 88.2%, are interest-only, and 8.2% of the pool are partial interest-only loans, according to Fitch.
Overall, about 68.3% of the collateral has a property quality grade of ‘A-’ or higher, Fitch noted. Meanwhile, 23.3% of the pool has a rating of ‘B+’ and 8.4% has a grade of ‘B.’
