The latest large-loan commercial mortgage securitization is backed  exclusively by manufactured housing owned and operated by Carefree Communities.

Carefree Portfolio Trust 2014-CARE is backed by a single, two-year floating-rate commercial mortgage totaling $650 million, according to a presale report published by Standard & Poor’s. The loan has three one-year extension options, for a total possible term of five years.

The loan is secured by the borrowers' fee interests, leasehold interests and pledge of equity in 31 manufactured housing (MH) communities, 31 extended-stay recreational vehicle (RV) communities, and six vacation/leisure RV communities totaling 19,678 pad sites located in seven states and Canada. The collateral consists of the pad sites only and does not include any inventory of manufactured homes or recreational vehicles.

S&P generally consider RV parks as a less-stable multifamily property type because of the high percentage of transient or seasonal demand. However, the presale report notes that the portfolio generates approximately 80.7% of revenue from annual contracts.

Among other risks, the trust loan balance is highly leveraged, with a 90.4% LTV ratio based on S&P's valuation. The LTV based on the appraiser's valuation is 64.9%. Our long-term sustainable value estimate is 28.2% lower than the appraiser's valuation. In addition to the mortgage loan, there is a $200.0 million mezzanine loan. Including the mezzanine loan, S&Ps LTV is 118.2%.

S&P has assigned a preliminary ‘AAA’ rating to a $310.2 million senior class with a loan to value ratio of 43.1%.      

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