Morgan Stanley and Bank of America have paired up for a $1.6 billion securitization issued from ther commercial mortage bond conduit trust MSBAM.
The 2014-C16 deal is collateralized by 76 fixed-rate commercial mortgage loans secured by 110 properties, according to Kroll Bond Ratings.
The loans have principal balances ranging from $2.1 million to $145.0 million for the largest loan in the pool, which is secured by Arundel Mills & Marketplace (11.4%), a 1.55 million sf, one-story regional mall and an adjacent 101,535 sf, one-story shopping center located in Hanover, Maryland.
KBRA noted in the presale report that the pool in the latest deal has a higher lodging concentration (24.0%) than any of the conduits it has rated over the previous six months. Lodging assets can have more volatile cash flows than other property types due to their dependence on nightly room rates.
However some of the risk is offset by the fact that 12 of the lodging loans amortize throughout their respective terms, with a weighted average amortization schedule of 27.3 years. Many commercial mortgages pay interest only for a period of time.
There are nine loans (13.8%) that are secured by single tenant buildings. This, said KBRA, is above the average single tenant exposure of the last 18 conduits it has rated. “Properties with multiple tenants that rely on a diversified tenant roster for their income stream can present less credit risk than properties that derive all of their cash flow from a single lessee,” according to the presale.
The single tenant exposure is represented by three loans (11.2%) that are among the largest 20 by balance, which include State Farm Portfolio (2nd largest, 7.9%), Library of Congress Annex (11th largest, 1.8%) and Exchange Right Portfolio II (20th largest, 1.4%).
All of the loans were contributed by three mortgage loan sellers: Bank of America, National Association (26 loans, 39.8%), Morgan Stanley Capital Holdings (29 loans, 36.4%) and CIBC (21 loans, 23.9%).
The trust will issue twenty classes of certificates. The chart below shows ho KBRA rated each tranche.