Wells Fargo is sponsoring its fourth 2020 commercial-mortgage securitization, which includes a portion of a 2019 mortgage loan for the MGM Grand/Mandalay Bay properties on the Las Vegas Strip.
According to a presale reports from Kroll Bond Rating Agency, Fitch Ratings and Moody's Investors Service, Wells Fargo Commercial Mortgage Trust 2020-C58 is a $696.3 million conduit deal involving 48 loans secured by 70 properties in 31 metropolitan statistical areas.
Mortgage loans for office (25.4% of the pool balance), retail (20.5%) and mixed-use (16.3%) properties make up most of the collateral pool, but Wells also includes part of a loan issued to MGM Grand/Mandalay Bay that boosted the lodging exposure to 9.8%.
The $45 million MGM/Mandalay loan participation in the deal makes up 6.5% of the Wells 2020-C58 pool balance. The loan is a portion of a $3 billion first-lien whole loan that has been split among nine previously issued CMBS transactions. MGM sold both properties last year in a $4.6 billion transaction with a joint venture involving prviate-equity firm Blackstone, which leased the properties back to MGM under a 30-year master lease that expires in February 2050, according to Kroll.
The casino-purchase loan is the second-largest loan in the transaction, behind a $69 million loan participation Wells holds for a mixed-use industrial park (McClellan Park) near Sacramento, Calif.
Kroll reports that 38 of the 48 loans have been issued since the onset of the coronavirus pandemic in March. Of the 13 post-COVID loan originations, each was structured with upfront debt-service reserves between one and 12 months.
Kroll, Fitch and Moody's have issued preliminary AAA ratings to senior notes being offered via the trust. Fourteen of the tranches are entitled to principal and interest, two are interest-only while another is for excess interest. One additional class represents residual interest.
The hotel exposure is limited to four properties. In addition to the casinos, the transaction also carries a loan for the Courtyard Marriott Sola Beach near San Diego and the Holiday Inn Salina in north-central Kansas.
Each hotel has had improving average occupancy levels since the COVID-19 outbreak — with the Marriott property reaching a peak occupancy of 69.9% in August and the Holiday Inn topping 80% in August.
