Goldman Sachs, Morgan Stanley and Bank of American Merrill Lynch are marketing two CMBS conduits totaling nearly $2 billion, according to rating agency reports.
Goldman's $1.1 billion deal, dubbed GSMS 2016-GS3, is collateralized by 34 commercial loans secured by 152 properties - one of the largest conduit deals in some time.
At least one of the loans will be familiar to CMBS investors because it has already been parceled out as collateral for other two other deals: 10 Hudson Yards, a new 1.8 million office tower in Manhattan. This loan is the largest in the pool, representing 8.2% of the trust balance. It is one of three loans with investment grade characteristics that, together, bring down overall leverage in the collateral pool.
The other two high-grade loans are backed by 540 West Madison, the second largest loan, representing 8.1% of the pool, and the Veritas Multifamily Pool, the seventh largest loan, representing 5.2% of the pool. All three loans are portions of larger loans and have companion notes held outside this securitization trust.,
The overall pool has a weighted average in-trust loan-to-value ratio, as measured by Kroll Bond Rating Agency, of 92.5%. That is lower than the 99% average of the 16 CMBS conduits KBRA rated over the last six months.
Fitch puts the “stressed” LTV of trust-specific debt higher, at 97.2%; however that is lower than 106.5% average for conduits that it has rated so far this year.
Retail properties represent the highest concentration of the pool at 32.7%, followed by office properties at 26.0% and hotel properties at 14.3% (one property representing 1.5% of the pool by balance was labeled mixed use by the issuer but was modeled as retail by Fitch).
Among other ratings drivers for Fitch is the fact that almost three quarters of the pool balance (21 loans, 71.1%) are loans that pay only interest for all or part of their terms. This means that the pool amortizes very little over the life of the deal, increasing the risk that the loans will be difficult to refinance when they mature.
Fitch and KBRA assigned triple-A ratings to both the super senior tranches of the deal, which benefits from 30% credit enhancement, and the senior tranche, which benefits from 21.25% credit enhancement.
The $889 million MSBAM 2016-C30 is backed by 49 commercial mortgage loans secured by 59 properties. It is also rated by Fitch and KBRA.