Deutsche Bank and Cantor Fitzgerald are marketing a $1.49 billion conduit CMBS deal, COMM 2013-LC6 Mortgage Trust’s, according to a Standard & Poor’s presale report published today.
The deal securitizes 70 commercial mortgage loans originated by German American Capital Corp., Ladder Capital Finance LLC, and Cantor Commercial Real Estate Lending L.P. with an aggregate principal balance of $1,492.3 million, secured by the fee interest in 99 properties across 27 states.
The loan pool is diversified by property type and region. Of the total trust balance, 36.6% is backed by retail assets, including malls and anchored and unanchored retail assets, 26.4% by office properties, 18.5% by hotels, 15.0% by residential assets, 2.0% by other/outdoor storage, 1.2% by mixed-use properties, and 0.3% by self-storage properties.
The deal is structured with five classes of ‘AAA’ rated notes. It will also offer investors $91 million of double ‘AA-‘ rated notes; $202 million of ‘A’ rated notes; $61 million of ‘BBB-‘ rated notes; $29.8 million of ‘BB’ rated notes; $27 million of ‘B+’ rated notes.
The transaction is structured with a "CCRE Strip." On any due date for the 16 mortgage loans that Cantor Commercial Real Estate (CCRE) is contributing (approximately 18.3% of the pooled trust balance), two basis points of the portion of the interest accrued on the CCRE loans' outstanding principal balance will be allocated to the CCRE Strip (which CCRE will hold outside of the trust) before being allocated for distribution to the trust certificates.
S&P said in its presale report that $276.4 million of the conduit pool or 18.5% of the pooled trust balance are secured by lodging assets. The ratings agency said it considers the lodging properties among the riskiest property types because their pricing structure changes daily, they have a significant underlying operating business, and they have a higher expense ratio relative to other property types.
However, the risky nature of these properties is mitigated by the low U.S. supply growth rate in recent years.