A new Benchmark trust commercial-mortgage securitization has an unconventionally high concentration of single-tenant loans folded into the pool, according to Kroll Bond Rating Agency.
The $983.2 million Benchmark 2021-B-26 – a multiborrower CMBS deal featuring mostly office (42.4%) and industrial properties in its collateral pool of 39 loans secured by 128 properties – contains 11 loans that are secured (either in whole or in part) by 71 single-tenant properties.
That represents 40.4% of the entire pool, making the single-tenant property exposure to the deal “significantly above the average” of comporable conduit deals the agency has rated in recent months (ranging from 4.9% to 28.1%).
“In addition, two other properties representing 10.7% of the pool derive in excess of 90% of base rent from a single tenant,” the report (published Monday) noted. Multi-tenant properties typically have a more diversified roster from which current rents can mitigate the loss of leasing revenue from a single occupant, Kroll noted in its report.
Mitigating that risk: 67 of the 71 single-tenant properties are part of portfolio loans, 22 of them have leases that extend beyond two years, and 44 are leased to tenants considered high credit-quality tenants.
The largest loans in the portfolio include loans that have been partially securitized in other recent CMBS deals: a $96 million loan for the Class A Burlingame Point office property
Kroll and Fitch Ratings have assigned preliminary AAA ratings to seven classes of super-senior and senior notes being offered.
The loans were contributed to the trust by JPMorgan Chase, Goldman Sachs, German American Capital Corporation and Citi Real Estate Funding.
Underwriters include Deutsche Bank Securities, Citigroup Global Markets, Goldman Sachs, JPMorgan, Academy Securities and Mischler Financial Group.
