Citigroup is readying $1.2 billion of commercial mortgage bonds backed by 58 loans secured by 104 properties, according to rating agency reports.
The deal, dubbed CGCMT 2016-GC36, will issue super senior notes rated triple-A by Kroll Bond Rating Agency and Fitch Ratings that benefit from credit enhancement of 30%; the so-called junior-A notes, which benefit from 25% credit enhancement, are also rated triple-A.
The loans used as collateral have principal balances ranging from $2.5 million to $115.0 million for the largest loan in the pool, 5 Penn Plaza (9.9%), which is secured by a 650,329 square foot, Class-B office building located in Midtown Manhattan. The top five loans, which also include Sheraton Denver Downtown Fee (9.5%), Austin Block 21 (9.5%), Glenbrook Square (8.8%), and Westin Boston Waterfront (4.7%), represent 42.5% of the initial pool balance, while the top 10 loans represent 59.4%
The portfolio’s biggest exposure, by property type, is to offices (31.1%); retail (27%), and lodging properties (21.6%).
Nearly three-quarters of the pool by aggregate transaction balance (41 loans, 71.9%) pay only interest, and no principal, for either part (42.3%) or all (29.5%) of their terms. The remaining 17 loans (28.1%) are fully amortizing.
The loans were contributed by four sellers: Goldman Sachs Mortgage Company (23 loans, 44.0%), Citigroup Global Markets Realty Corp. (18 loans, 35.9%), Cantor Commercial Real Estate Lending, L.P. (8 loans, 11.3%), and Starwood Mortgage Funding I LLC (9 loans, 8.8%).
More than half of the loans were used to refinance existing debt (33 loans, 57.0%), while the proceeds from the remaining loans were used to acquire property (18 loans, 24.5%), recapitalize property (6 loans, 18.2%), or for a combination of acquisition and refinancing (1 loan, 0.3%).
Although the overall leverage in the trust, as measured by Kroll, is high, with a loan-to-value ratio of 101.4%, it is not quite as high as the average of the 24 CMBS conduits KBRA rated over the last six months (102.4%). These transactions had in-trust KLTVs ranging from 96.0% to 108.6%.