Citigroup is marketing its latest commercial mortgage securitization heavily centered on the more volatile CMBS mix of hotel and office properties.

Citigroup Global Commercial Mortgage Trust 2016-3 is a $756.4 million asset-backed pool of 44 fixed-rate loans secured by 72 commercial properties.

The loans were originated and sold by Citigroup Global Markets Realty Corp. (issuing 15 loans, comprising 35.7% of the pool), Barclays Bank, Cantor Commercial Real Estate Lending, and Rialto Mortgage Finance. All but one of the loans was originated within the last five months.

The portfolio structure includes five Class A notes series totaling $592 million with 30% credit support and provisional triple-A structured finance ratings from Fitch Ratings, DBRS and Moody’s Investors Service.  The senior Class A tranches are sized at $31.2 million (Class A-1), $75.4 million (A-2), $180 million (A-3), $209.2 million (A-4)and $33.7 million (A-AB). A series of subordinate Class A notes – also rated ‘AAA’ by DBRS and Moody’s – totals $63.4 million, with 21.63% credit enhancement.

The capital stack is rounded out by six subordinate note classes totaling $163.6 million, as well as interest-only notes matching those of the fixed-rate notes.

The average loan size is $17.19 million, with 11 of the loans non-amortizing, interest-only loans that make up over 41% of the pool.  

According to Moody’s, the pool contains 16 hotel properties tied to eight loans (or 20.9% of the pool balance), and 28 office properties through ten loans comprised of 36.3% of the pool balance. The property mix also include anchored retail (7.7% of the pool) and multifamily (14.8%).

Two of the eight largest loans in the pool, Potomac Mills and Quantum Park, were credited with investment-grade show ratings by DBRS – making up 8.6% of the pool. Five of the largest 15 loans, or 28.3% of the pool, were modeled with “strong sponsorship,” according to DBRS: Briarwood Mall (the largest loan slice at $65 million), 101 Hudson Street, Potomac Mills, Hill7 Office and Mills Fleet Farm.

Properties owned by Simon Property Group - including Briarwood and Potomac Mills – comprise 13.2% of the pool’s assets.  

DBRS also credited the pool with a strong cash flow component: the debt-service coverage ratio of the entire pool is 1.95x – with 23 of the loans (73.95%) having DSCR in excess of 1.5x.

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