CoreVest American is pricing its first securitization of 2021, with a $275 million pool of pass-through commercial mortgage-backed securities mostly on single-family and multifamily residences.
The 61 loans in CoreVest American Finance 2021-1 Trust finances 2,253 properties, and are substantially concentrated by borrower, geography and property type, according to Fitch Ratings. Single-family residences make up 52.3% of the property types in the pool, followed by multifamily properties, which account for 18.2%. The transaction also has a high geographic concentration, with three states, Texas, New Jersey and Connecticut, accounting for 52.9% of the securitized loans.
CoreVest American appears to offset those aspects of high concentration with leverage ratios that are better than on deals that have come out in the last year, according to Fitch. The deal’s debt service coverage ratio (DSCR) is 1.02x, loan-to-value (LTV) is 122.9%, and net cash flow is 7.7%.
Scheduled amortization of 9.1% is also below average, compared with deals in the 2020 series. CAFL 2020-3, CAFL 2020-2 and CAFL 2020-1 showed scheduled amortizations of 9.7%, 11.5% and 12.4%, respectively.
Fitch cites strong organizational practices on the issuer level as a positive rating effect on the CoreVest notes. Some of those practices include property-oriented cash flow underwriting and funded reserves for taxes, insurance and capital expenditures. The notes have another layer of security — equity pledges from borrowers. About 2% of the 2021-1 pool has either full or partial equity pledges from the borrower.
Fitch and Kroll Bond Rating Agency assigned triple-A ratings to the first two classes of the deal, ‘A’ and ‘X-A,’ both amounting to $181,097. The other classes in the capital structure, from ‘B’ to ‘H’ were not rated by Fitch.
Kroll Bond Rating Agency, however, assigned a triple-A rating to the $70.8 million ‘X-B’ class; a double-A rating to the $26.2 million class; and an ‘A’ rating to the $14.8 million, C class.
The $25.1 million ‘D’ class received a triple-B rating; and the $4.6 million ‘E’ class received a triple-B rating.
The CoreVest sponsor will retail the $7.4 million ‘F’ class, the $4.4 million ‘G’ class, and the $12 million H classes to satisfy risk retention requirements, according to KBRA.
