Deutsche Bank has pieced together an $806.2 million commercial mortgage securitization highlighted by the $42 million mortgage for Netflix’ expanded headquarters space under construction in Las Gatos, Calif.
The COMM 2016-DC2 trust is collateralized by 63 commercial loans – most with 10-year terms and a total principal of $895.3 million – that were underwritten by mortgage sellers German American Capital Corp., KeyBank National Assn., and Jefferies LoanCore LLC. The depositor is Deutsche Mortgage & Asset Receiving Corp.
Both Kroll Bond Rating Agency and Fitch Ratings issued preliminary ratings to the deal. The trust will issue $564.3 million in five super-senior ‘AAA’-rated tranches with 30% credit enhancement, as well as a subordinate ‘AAA’-rated A-M class of notes totaling $50.3 million carrying 23.75% CE.
The structure also includes $162.2 million in six rated classes of subordinate notes ranging from ‘AA’ to ‘B-‘, and a residual, unrated interest tranche of totaling $29.2 million. The remainder of the 22 note classes are six unrated interest-only tranches.
The commercial loans in the portfolio are led by a 31.2% chunk of retail mortgages, following by 16% of office space loans, and 13.6% in lodging. The largest exposure in the pool is a $75 million loan (9.3% of the pool) to Sun MHC Portfolio, comprised of 12 manufactured housing communities in six states.
The portfolio is a diverse geographic mix of loans mostly in California (22%), Georgia (14.7%) and Texas (10.5%).
According to Kroll, 93.8% of the loans in the pool are secured by fee interests, and just over half (51.1%) are refinancings. A little over one-third (34.7%) of the pool, spread among seven loans, are split loans where the properties secure one or more pari passu companion loans.
The $42.1 million Netflix loan is the fifth-largest of the pool, and the largest single-tenant borrower. The Netflix loan in the COMM 2016-DC2 trust is for the 113,520-square foot Headquarters 1 building that is part of an overall 323,000-square foot headquarters complex that Netflix has under construction.
The size of the trust is slightly smaller that Deutsche’s recent COMM 2016-CCRE28 ($1.03 billion) and COMM 2015-CCRE27 ($931.6 million) securitizations with Cantor Fitzgerald.
