BLOX Trust 2021-BLOX, a commercial mortgage-backed securities trust, is preparing to issue $205 million in CMBS certificates, which themselves are secured by a five-year mortgage facilitating the purchase of two new office properties in Bellevue, Washington, known as Block 16 and Block 24.
The CMBS trust BLOX 2021-BLOX will issue notes based on a sequential-pay capital structure, and apply the proceeds to recouping $4.3 million in closing costs, recapitalizing the deal’s sponsor after acquiring the properties, and funding a reserve to cover a later-delivery penalty on Block 24, one of the two new buildings, according to rating agency assessments.
BPREP Office Holding, LLC, a division of Brookfield Premiere Real Estate Partners, is the loan sponsor, while Goldman Sachs Bank USA and DBR Investments Co. Ltd., originated the loan backing the notes, according to Fitch Ratings. Goldman Sachs Mortgage Company is the retaining sponsor on the deal, according to Kroll Bond Rating Agency.
In terms of BLOX 2021’s capital structure, KBRA notes that the transaction is structured as a grantor trust. All residual amounts will be distributed to the outstanding classes on a pro rata basis.
Facebook, the tenant in both buildings, invested $59.2 million into the buildout of Block 16 in particular, KBRA said. Tenant and landlord contributions to Block 24 are expected to be similar to that of Block 16, but since Block 24 is still under development, the precise amount is still not known.
KBRA did assign both buildings a property score of 4.00, because of their location, tenancy, recent construction and overall appeal, with amenities like cafeterias on each floor and maternity rooms.
Bellevue’s Spring District is a former locus of industrial activity and warehouses undergoing a massive redevelopment. San Francisco-based Shorenstein Properties and Seattle-based Wright Runstad are currently implementing a master plan project that is expected to create more than 4.0 million square feet of office, retail, restaurant, residential, and lodging spaces, in a neighborhood and pedestrian-friendly setting.
Fitch and KBRA expect to assign ‘AAA’ ratings to the $112 million class A notes. Meanwhile, KBRA expects to assign a ‘AA-’ rating on the class B notes; ‘A-’ to the class C notes, and ‘BBB-’; ‘BB’ and ‘BB-’ ratings to the class D, E and HRR notes.
