Citigroup and Cantor plan to issue $343 million in securities backed by three loans that are secured by two office properties and a retail complex.
Kroll Bond Ratings has preliminary ratings to notes issued from the CG-CCRE 2014-FL1 trust, including $206 million of class A notes with credit enhancement at 36.9%, AAA’; $48.37 million of class B notes with credit enhancement at 22.16%, AA-’; $28.9 million of class C notes with credit enhancement at 13.30%, A-’; $35.7 million of class D bires wirh credit enhancement at 2.36%, BBB-’; and $7.7 million of class E notes BB+’.
The loans are not cross-collateralized or cross-defaulted. Office assets secure two each of the loans. The Corporate Woods loan is secured by 20 office buildings and a retail strip center located within a 29 property office park in Overland Park Kansas, approximately 13 miles southwest of the Kansas City CBD.
The 717 North Harwood secures one loan. The office complex, which is located in Dallas, Texas, is currently 50.8% occupied and two tenants are scheduled to vacate over the next year, which contribute 32.3% of total base rent. Two new tenants equating to 39.2% of total base rent have recently signed leases. However KBRA notes in the presale that “total occupancy after the tenant departures will still be relatively low, at 55.4%.”
“This presents additional default risk over the loan term, as should the asset not lease to market levels and/or experience reduced occupancy, it will place pressure on property cash flows that are available to pay debt service," according to the presale. “Furthermore, the borrower may be unable to find a lender to refinance the loan”.
One loan is secured by the Yorktown Center, a 1.4 million square foot retail complex located in Lombard, Illinois.
The Yorktown Center and Corporate Woods loans have a three-year term with two, one-year extension options. The 717 North Harwood loan has a 26-month terms with three, on-year extension options.
All of the loans have existing subordinate debt in the form of mezzanine loans
Cantor Commercial Real Estate Lending, L.P. and Citigroup Global Markets Realty Corp. are the loan sponsors.