Citigroup Commercial Mortgage Trust, is preparing to offer $405 million commercial mortgage-backed certificates to investors, all secured by one five-year, fixed-rate and interest-only mortgage loan on a portfolio of self-storage properties.
The securitized amount is actually part of a $470 million whole loan, according to the agencies planning to issue ratings to the notes, Kroll Bond Rating Agency and Fitch Ratings. Analysts almost immediately highlight one positive credit aspect of the deal, which is that self-storage facilities that make up virtually the entire collateral pool.
Fitch analysts, for instance, point out that self-storage properties are recession resistant. People generally always need to store goods for one life-altering reason or another, such as death, divorce, dislocation or relocation. Self-storage properties were the only real estate type that generated returns in the green during the global financial crisis in 2008, Fitch ratings analysts said. As of the trailing twelve-month period that ended April 2023, the portfolio, net operating income had increased to 77.0%, to $44.6 million, up from $25.2 million annualized in 2019.
Known as CGCMT 2023-PRM3, and sponsored by Robert J. Moser, founder and chief executive officer of Prime Group Holdings, the deal is slated to close on June 29, and will offer certificates through six classes of notes. Repayment will follow a senior sequential structure, including any voluntary prepayments, according to Fitch.
Forty-five properties across 15 states are funded by the mortgage collateral, according to KBRA. Key financials, at least from KBRA's perspective, includes a 8.26% cap rate, a loan-to-value ratio of 90.9%, an issuer value of $516 million and a debt yield of 9.1%.
Ratings analysts find the collateral to be geographically diverse, with 21 distinct metro areas represented in the portfolio. The largest three states—New York (31.1%), Georgia (18.8%) and South Carolina (7.7%)—account for 57.6% of the portfolio's allocated loan amount, Fitch and KBRA said.
Citi Real Estate Finding originated the mortgage and is the seller, while Berkadia Commercial Mortgage will act as servicer and Mount Street as special servicer. Wilmington Trust will act as trustee, according to Fitch.
KBRA expects to assign ratings of 'AAA'; 'AA-'; 'A-' and 'BBB-' to classes A, B, C and D. Fitch, meanwhile, will assign 'AAA' ratings to the $264.8 million, class A certificates; 'AA' to class B; 'A-' to class C and 'BBB' and 'BBB-' to classes D and HRR, respectively.
All certificates have a July 2040 legal final maturity date, according to Fitch.
