Citigroup’s latest securitization issued from its commercial mortgage trust offers up the usual mix of commercial real estate properties. But the pool's exposure to hotel properties has decreased significantly relative to recent conduits, according to Kroll Bond Ratings Agency.
Only 3.7% of the pool is exposed to hotels, lower than the typical 6.3% to 25% exposure in the last 20 CMBS conduits rated by Kroll. The decrease in hotel exposure is a good thing since hospitality assets can have more volatile cash flows than other property types due to their dependence on nightly room rates.
In total, CGCMT 2015-GC31 is selling $723.3 million of securities that are backed by 50 loans secured on 76 properties.
The largest loan in the pool, worth $100 million, is backed by 135 South LaSalle, a 1.3 million square-foot, class-A office building located within Chicago's Central Loop District. Selig Office Portfolio (10.0%), Dallas Market Center (9.9%), Pasadena Office Tower (5.8%), and St. Anthony's Healthplex North (4.1%), represent 43.7% of the initial pool balance.
Loans have a weighted average (WA) term of 9.4 years and pay an average coupon rate of 4.08%.
The trust has lower leverage compared to some of the deals Kroll has rated over the last six month. Based on appraisals, loans have a weighted average (WA) loan-to-value ratio of 60.7%. Kroll’s stressed LTV is 97.8%, lower than the last 20 deals it rated. Most of the loans (79%) pay only on interest for at least a period of the mostly 10-year terms; 26 loans are partial-term, interest-only loans and 5 loans pay only interest for the entire term.
The majority of the loans (39 loans, 86.6%) were used to refinance existing debt, while the proceeds from 11 loans (13.4%) were used for property acquisitions.
Kroll assigned 'AAA' ratings to the super senior, class A tranches that benefit from 30% credit enhancement and a 'AAA' rating to the junior class A tranche that benefit from 21% credit enhancement. The trust will also offer a series of junior notes ranging from 'AA-' to 'B'.
