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Burbank office portfolio shows up in yet another CMBS

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A 2 million-square-foot office portfolio in Burbank, California, is making an appearance in yet another commercial mortgage securitization.

A $40 million slice of the original, $600 million mortgage on the portfolio is one of the largest of 38 loans used as collateral in UBS 2017-C6, a $684.7 million conduit.

The Burbank office portfolio was originally securitized in DBUBS 2017-BRBK, a $300 million single-asset CMBS in October; portions of the mortgage have shown up in at least two other deals in November.

It’s one of three loans with investment-grade characteristics that help reduce the overall leverage in the collateral pool for UBS 2017-C6. The others are the $40 million Yorkshire & Lexington Towers, a multifamily property, and 111 West Jackson in Chicago (the sixth-largest loan, at 4.4% of the portfolio).

The overall pool has a weighted average in-trust loan-to-value ratio, as calculated by Kroll Bond Rating Agency, of 95.8%. Kroll describes this as “modestly above” the average LTV of 94.4% for the 20 conduits it has rated over the past six months.

Fitch puts the LTV somewhat higher, at 101.1%, which is “slightly higher” than recent comparable Fitch-rated multiborrower transactions. Excluding the three higher-quality loans, the pool’s LTV is much higher, at 108.9%, compared to the YTD 2017 average of 106.7%.

The Burbank office portfolio is hardly the only loan that can be found in other CMBS, however. At total of 19 of the 38 loans in UBS 2017-C6 are portion of larger loans split into multiple notes that rank pari passu, or on equal basis, in terms of their lien on the underlying properties, according to Kroll. Together, they account for 67% of the collateral, by balance. That’s the highest among all of the conduits that Kroll has rated to date. Kroll view this as credit neutral, however.

Kroll also noted in its presale report that there are 12 loans (47% of the balance) in UBS 2017-C6 with previously securitized collateral, two (8.7%) of which were associated with a principal loss.

Twenty-two classes of certificates will be issued in the transaction, of which 14 classes are entitled to principal and interest, seven classes receive interest-only, and one class is a residual interest. Both Kroll and Fitch assigned triple-A ratings to the super senior tranches of notes, which benefit from 30% credit enhancement, as well as to the senior class, which benefits from 18.875% credit enhancement.

A majority-owned affiliate of Rialto Mortgage Finance, will hold the risk retention interest, as well as to an eligible vertical interest equal to at least 5% of each non-residual class.

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