Credit Suisse is structuring its first conduit commercial-mortgage securitization in over a year, pooling together loans with an above-average exposure of retail and lodging properties compared to recent multi-borrower transactions.
The $650.1 million CSAIL 2021-C20 sponsored by Credit Suisse Commercial Mortgage Securities Corp. includes 28 loans secured by 40 properties, headlined by The W.R. Grace Building office tower in midtown Manhattan as well as a participation in $3 billion loan issued in 2019 for the
The portfolio of loans also includes two previously modified loans, as well as a regional super-mall in New York – representing one of the riskiest sectors of CMBS loans in terms of loss severity, according to Moody’s Investors Service.
The transaction will spread across 17 classes of notes, of which the super-senior and senior classes have preliminary triple-A ratings from Moody’s and Kroll Bond Rating Agency.
While the largest segment of the pool is concentrated on multifamily/manufactured housing, none of those loans represent more than 3% of the pool loan balance.
The largest loan participation for CSAIL 2021-C20 is at $60 million for the 1.6-million square foot, Class A+ W.R. Grace Building, a Manhattan high-rise owned by Brookfield Property Partners. Its tenants include The Trade Desk (NYSE: TTD), Bain & Co. and Bank of America as major tenants. The building was fully open and operating as of January 2021, with rent collections at 91.1%, according to a Kroll presale report.
The bulk of Brookfield $1.25 billion loan
Office properties make up 23.3% of CSAIL 2021-C20's asset pool, by loan balance.
One of the loans that was previously modified was the $400 million Miami Design District loan, of which $60 million was parceled into Credit Suisse’s new deal. The loan was actually modified twice, in April 2020 allowing rent deferral during the spring and summer as well as last October. The second modification including the borrower providing a $10.5 million six-month debt service reserve that covered whole loan debt-service payments for the first three months of the year.
Another modified loan is the pool's 14thlargest obigation ($18.8 million or a 2.9% pool share) for the Springhill Suites Boise (Idaho) limited-service hotel. Springhill, which fell to 11.1% occupancy last April before recovering to monthly ranges between 50%-65.8% last fall, had its loan amended for $2 million in debt forgiveness in exchange for a $3 million loan paydown and an interest-rate hike to 3.75% from 3.64%.
MGM Resorts and Mandalay fully reopened operations this month, according to reports, providing stronger cash flow for CSAIL 2021-C20 as well as 16 prior CMBS transactions that the casino loan has been doled out to since 2019. Borrowers MGM Growth Properties Operating Partnership and BREIT Prime Lease Holdings both submitted notice in February that they were taking the option of an excess cash flow guaranty, in lieu of depositing excess cash flow into a reserve account.
MGM/Mandalay and Springhill together account for 8.9% of the pool, slightly above recent average lodging exposure of 8.6% in other CMBS deals, according to Kroll.
According to Kroll, the 24.3% share of retail loans in the pool is the second-highest concentration of any conduit deal it has rated over the past six months, and well exceeds the 17.4% average over that period.
That portion of the pool includes the 819,979-square foot Westchester super-regional mall in White Plains, N.Y., which was closed for three months last year due to COVID-19 restrictions. The mall was 89% leased and anchored by tenants Nordstrom and Neiman Marcus prior to the outbreak – but had to provide rent relief and deferrals to “several” tenants during the spring and early summer, Kroll’s report stated.
But those rent deferrals are expected to be paid back in equal monthly installments beginning this year. The loan, which has been part of two prior conduit securitizations, remains current.
