Citigroup and Goldman Sachs are marketing nearly $2 billion of bonds backed by commercial mortgages used to facilitate Blackstone Real Estate Partners VIII’s acquisition of BioMed Realty Trust, a real estate investment trust that owns, manages and develops office and laboratory space.
On Jan. 27, Blackstone completed the acquisition of BioMed for total consideration of approximately $8.8 billion. The properties securing the two loans being securitized in this CMBS, dubbed CGGS Commercial Mortgage Trust 2016-RND, represent a substantial portion of BioMed’s stabilized lab office portfolio, according to Fitch Ratings.
The two loans held in the securitization trust comprise one five-year, fixed-rate, interest-only $1.115 billion mortgage loan secured by the fee and leasehold interests in 30 lab office properties and one multifamily property with a total of 4.6 million square feet (Pool A); and one two-year, floating-rate, interest-only $658 million mortgage loan secured by the fee and leasehold interests in 28 lab office properties with a total of 4.0 million square feet (Pool B).
Fitch has assigned ‘AAA’ ratings to the senior notes to be linked to each pool of collateral; the senior class A notes benefit from credit enhancement of 45.5% and the senior class B notes benefit from 36.6% credit enhancement.
Fitch cited the quality of the properties as the key ratings driver. Both pool A and pool B are collateralized by lab office properties located in “highly desirable and in-fill life science submarkets,” according to the presale report. The rating agency assigned a weighted average property quality grade of “A-/B+” to pool A and “B+” to pool B.
The presale report does not characterize the leverage of the deal; Fitch calculates the “stressed” debt service coverage ratio and loan to value ratio of the $1.115 billion loan at 1.04x and 86.4%, respectively. The stressed DSCR and LTV for the $658 million trust mortgage loan are 1.30x and 69.2%, respectively.
However, both pools of collateral also back additional debt not included in the securitization trust: the total debt package for pool A includes $661.4 million of mezzanine financing, bringing to stressed DSCR and LTV to 0.65x and 137.6%, respectively. The total debt package for pool B includes a $164 million subordinate non-trust mortgage B-note and $359.6 million of mezzanine financing. They bring the stressed DSCR and LTV to 0.72x and 124.2%, respectively.