Harvest Commercial Capital is selling $264.5 million in business-purpose, small balance commercial mortgage loans that it originated, primarily, supported by a mix of fixed-, fixed-reset and adjustable-rate mortgages.
The Harvest Commercial Capital Loan Trust, 2025-1, is the sponsor's ninth securitization, with notes that are scheduled to finally pay off in June 2057, according to ratings analysts at Morningstar | DBRS. The trust will sell the notes through seven tranches of class A and M notes, which will repay investors through a senior-subordinate structure.
Mizuho Securities is the lead underwriter and manager on the deal, according to DBRS and Asset Securitization Report's deal database. Performance Trust Capital Partners is also on the deal as underwriter, DBRS said.
Founded in 2016, Harvest Commercial's core focus was originating Small Business Administration 504 loans, plus small-balance commercial loans and investor loans. Core customers are entrepreneurs that want to have more control over property costs for a business they own or control. The collateral pool breaks down to:
• owner-occupied, first-lien small-balance commercial loans
• owner-occupied, first-lien SBA 504 mortgage loans
• non-owner occupied, first-lien investor loans
The three loan types—small-balance, SBA 504 mortgages and investors loans account for 46.5%, 46.9% and 6.4% of the pool, respectively, says DBRS. Most of the mortgages are backed by multipurpose commercial real estate properties, like office, industrial and retail properties. Hotels, urgent care, school, marinas and other types are more special-purpose properties, and Harvest Commercial does not tend to focus its lending on those, says the rating agency.
A small portion of the pool, 1.64%, have balloon payments at their maturity dates, DBRS said, an amount that aligns with the amount that Indigo Direct Lending originated.
Subordination, excess spread and a reserve account provide credit enhancement to the notes, says DBRS. There is also a capitalized interest account with enough funds to pay any shortfall in the interest due on the notes just in case the pre-funding account fails to produce interest at the net weighted average coupon rate, the rating agency said.
DBRS assigns AAA to the class A notes; AA to the M1 notes; A to the M2 notes; BBB to the M3 notes; BB to the M4 notes and B to the class M5 notes.
