A portfolio of 18 industrial/logistics properties are being recapitalized through a first-lien mortgage loan that will back a new $425 million commercial mortgage-backed bond offering.
COMM 2021-LBA Mortgage Trust is being sponsored by a realty fund affiliate of LBA Logistics, a national full-service industrial real estate and management company.
LBA controls day-to-day operations, but the properties are held by a joint venture between LBA and GIC Private Ltd., the sovereign wealth fund of Singapore.
At loan closing, GIC will contribute “significant” cash equity into the JV to facilitate the recapitalization efforts of the portfolio, according to presale reports from Moody’s Investors Service and DBRS Morningstar.
The transaction features eight classes of notes, including a Class A senior-note tranche with preliminary triple-A ratings from each agency.
The properties are located in seven states, with a combined net rentable area of 4.34 million square feet. The individual properties have an average appraised value of $639 million.
A little more than half of the logistics properties (per allocated loan amount) include centers located in “global gateway” markets near regional and global distribution hubs such as Los Angeles, the Inland Empire region in Southern California, the San Francisco Bay area, Seattle, Chicago, Philadelphia and New York/New Jersey. (The remainder are in San Diego, Sacramento, Jacksonville, Orlando and Salt Lake City).
The properties are leased to full-service distribution/warehouse operators, with very little tied to flex office/industrial space located within the centers (8% of net rentable area). Moody’s notes this is a credit strength for the deal, since office space within logistics facilities is usually taken up by smaller enterprises with no industrial needs.
These are “generally” businesses only looking to lower office costs, and are thus a “less dedicated tenant” for renewal purposes, the ratings agency noted. Tenants on average are leased for the next 6.1 years.
The facilities have an average age of 35 years, with most built before 1990. Moody’s stated the properties “appear well-maintained” with less than $40,000 in immediate repairs necessary, according to third-party property condition reports.
