A split rating at the senior note level had no apparent impact on investor demand for the latest offering of commercial mortgage bonds from JP Morgan and Barclays.
Moody’s Investors Service assigned an Aa1’ to the 10-year senior tranche of F JPMBB 2014-C23, while KBRA and Fitch Ratings both gave them top marks of AAA.’ The notes priced at a spread of swaps plus 110 basis points, right in line with the comparable tranche of GSMS 2014-GC24, which were rated triple-A across the board by Moody's, KBRA and Morningstar.
The 10-year, super senior tranche of JPMBB 2014-C23, rated Aaa’/ AAA’/ AAA,’ priced at swaps plus 84 basis points, three basis points inside the comparable tranche of GSMS 2014-GC24.
Further down the capital stack, JP Morgan and Barclays sold the Aa2’/ AA’/ AA’ , 10-year notes at a spread of swaps plus 145 basis points and the 10-year, A3’/ A’/ A’ class C notes priced at a spread of swaps plus 185 basis points.
The deal is collateralized by 65 commercial mortgages secured by 101 properties with exposure to all of the major property type segments. The four largest exposures include multifamily, office, retail and lodging.
The transaction pool is comprised of loans ranging from $2.2 million to $105.0 million for the largest loan in the pool, which is secured by 17 State Street (7.7%), a 560,210 sf, 42-story, Class-A office building located in the downtown area of New York City’s Manhattan borough.
The loan terms vary: 53 loans have 10-year terms (76.7%), and the remainder of the pool is comprised of loans with five-year (ten loans, 18.6%), seven-year (one loan, 3.0%), and 20-year (one loan, 1.6%) terms.
Over half or 76.4% of the loans in the pool pay only for the life of the loan (six loans, 24.5%) or for a partial term (30 loans, 51.9%) loans.
The overall pool has a weighted average LTV of 102.5%, higher than the last 18 CMBS conduits rated by KBRA over the past six months, which had LTVs ranging from 94.0% to 106.0%, with an average of 101.2%. The pool also has a significant concentration of high leverage loans with LTVs in excess of 100.0% (69.2%).
