The September CMBS pipeline continues to build. This week JP Morgan is marketing a large loan CMBS deal, while Goldman Sachs and Citigroup plan to issue a conduit deal.
JP Morgan plans to issue commercial mortgage backed securities backed by the underlying mortgage loans that are secured by ten collateral properties.
Kroll Bond Ratings has assigned ratings to the deal, JPMCC 2014-FL5. Eight loans (66.4%) are secured by the borrowers' fee simple interests in the related properties. However, one loan, Fairmont San Francisco (the 2nd largest, 20.9%) is secured by the borrower’s leasehold interest in a portion of the property consisting of a parking area and fee interest in the remaining portion of the property. The remaining loan, Double Tree Bahia Mar (4th largest, 12.7%), is secured by the related borrower’s leasehold interest in the related property. Approximately 53% of the asset’s revenue is derived from a non-traditional revenue source in the form of a 254-slip marina, according to the presale report.
Eight of the ten loans are secured by hospitality assets (92.4%), while the remaining loans (7.6%) are secured by office properties. Hospitality assets can have more volatile cash flows than other property types due to their dependence on nightly room rates.
The loans included in the pool have an aggregate in-trust principal balance of $671.3 million.
The structure includes a senior pooled component totaling $516.7 million that is collateralized by none of the ten loans and a subordinate non-pooled component, which total $495.7 million and $154.6 million, respectively.
“Proceeds from the pooled trust assets are the sole source of cash flow for distribution to the pooled certificates, explained the KBRA presale report. “Each non-pooled loan component serves as the sole source of cash flow for a loan-specific class of certificates”.
All of the loans are structured with a two-year term and three, one-year extension options, and are indexed to one-month Libor. The loans are interest-only for the entire term.
Also marketing this week is Goldman Sachs and Citigroup’s GSMS 2014-GC24, a $1.1 billion CMBS conduit transaction collateralized by 74 fixed rate commercial mortgage loans that are secured by 116 properties. KBRA has also assigned preliminary ratings to the deal.
The pool has exposure to all the major property types, with three that represent more than 10.0% of the pool balance, including retail (33.3%), office (22.4%) and multifamily (17.6%). The loans have principal balances ranging from $1.8 million to $140.0 million for the largest loan in the pool, Stamford Plaza Portfolio (13.0%), a high-rise office campus located in downtown Stamford, Connecticut.
The majority of the pool balance (37 loans, 62.9%) is comprised of loans with interest-only periods, of which 31 (47.7%) are partial-term IO and six (15.1%) are full-term IO. The balance of the pool is comprised of amortizing balloon loans (37 loans, 37.1%) that require principal payments throughout their respective terms.
Analysts at JP Morgan stated in a report published Friday that the new issue calendar for this month could see over $15 billion placed with investors, more than double the $6.8 billion monthly average of the last six months.