BMO 2023-5C1 is preparing to issue $766.3 million in commercial mortgage-backed securities (CMBS), secured by a portfolio of 27 loans on mostly retail and office properties.
The loans finance 86 properties in all, with the retail sector accounting for the largest proportion, 26.8%, and office as the next-largest piece of the portfolio, with 25.9% of the collateral pool, according to ratings analysts from the Kroll Bond Rating Agency. The other sub-sectors that comprise the pool are industrial, multifamily and other, with 19.8%, 14.7% and 12.8%, respectively.
With 24 sponsors, the collateral pool comprises mostly full-term interest-only loans, 97.4%, according to KBRA. Otherwise, amortizing balloons make up the next highest percentage of loans, at 2.6%. Loans with existing additional debt account for 29.4% of the pool, and loans with future additional debt provisions account for 6.5% of the pool, the rating agency said.
BMO 2023-5C1 has 27 loans in the collateral pool, which the rating agency says is among the lowest counts among the 320 conduit CMBS transactions rated by KBRA since 2012. Across those deals, the loan count averaged 56 and ranged from 20 to 133, according to KBRA. Such a low loan count translates into lower diversification in the pool, according to the rating agency. The pool's five, 10 and 15 largest loans account for 38.9%, 67.0% and 83.4% of the pool balance, respectively.
In terms of geographic diversification, the properties are located across 30 metropolitan statistical areas, with the top five being New York, 34.3%; Richmond, 8.2%; Atlanta, 7.9%; Stamford, 7.6% and Inland Empire, 6.8%. At the same time, more than half of the pool, 63.7% is located in primary markets, KBRA said.
"The pool's primary market exposure is also higher than the annual averages for KBRA rated conduits since 2013," analysts wrote.
The trust will issue notes through 11 tranches of notes, KBRA said. The A-1 through A-S classes will be rated 'AAA'; while the class B through G-RR classes will receive ratings of 'AA-' through 'B'.
As for interest-only notes, the X-A and X-B classes will receive 'AAA' ratings, and the X-D notes are slated to receive 'BBB' notes. All of the notes, whether IO or principal and interest, have a final distribution date of August 2056, the rating agency said.
