The Citigroup Commercial Mortgage Trust 2022-GC48 is preparing to raise $633.3 million from the capital markets off a portfolio with a below average representation of mortgaged properties in primary markets, compared with similar transactions.
Some 32 loans taken out by 31 sponsors to finance 88 properties secure the transaction, according to a pre-sale report from the Kroll Bond Rating Agency. Full term interest-only loans, about 27, represent 88.8% of the pool, the largest loan type followed by amortizing balloon loans, amounting to three and representing 9.3%.
Primary markets is the locale for just about half of the collateral pool, 49.3%, which is below the average of 53.4% observed in the comparison set, KBRA said. This could be a potential credit negative, in KBRA’s estimation, because primary markets tend to have larger and more diversified economies that secondary and tertiary markets, making them hardier in times of economic and real estate downturns.
KBRA expects to assign ratings ranging from ‘AAA’ on the $3.9 million, A-1 notes to the ‘AA’ on the $30.0 million, B notes and ‘A-’ on the C notes. Subordinate notes are slated to receive ratings ranging from ‘BBB+’ to ‘B-’, according to KBRA.
For this round of securitization, the five largest MSAs represented in CGCMT 2022-GC48’s are New York (25.6%), North-Central New Jersey (9.6%), Detroit (6.4%), Washington-NOVA-MD (6.3%) and Los Angeles (5.4%), according to KBRA.
Also, five of the loans in the pool with existing or permit future subordinate secured indebtedness—or both, KBRA noted. That number represents 15.6% of the pool, a rate that falls below the comparison set average of 24.8% for conduit CMBS transactions that KBRA has rated over the last six months. The range of additional indebtedness on that set was 6.1%-33.3%. A higher aggregate debt burden increases the risk of default on loans, the rating agency said.
Six of the loans in the pool are secured either partially or in whole by 39 single tenant properties, accounting for 16.1%.
Yet there are positive aspects to the deal, including the fact that there are 10 portfolio loans in the collateral pool, or 34.9%. The portfolio loans include seven top 10 loans, including the Yorkshire & Lexington Towers, representing 9.5% and the Sunbelt Office Portfolio, with three properties representing 6.8% of the pool.
