A pool of class-A loans on multifamily properties will collateralize the ACREC 2025-FL3, a commercial real estate collateralized loan obligation for about $876 million.
ACREC Partners REIT II is sponsoring the deal, which includes loans on 25 properties, including 360 Market Square, a 292-unit, high-rise apartment building in Indianapolis that accounts for the largest percentage of the pool balance, according to Kroll Bond Rating Agency.
It is the third deal under its commercial real estate CLO shelf. The managed CRE CLO has a 30-month reinvestment period that includes a 180-day ramp-up period that equals 20.4% of the fully ramped up transaction balance, KBRA said, adding that 9.8% of the assets have been pre-identified.
The deal is slated to close in January, KBRA said. The ramp-up period ends in July 2025, and the securities have a stated maturity in August 2042, the rating agency said.
J.P. Morgan Securities is the sole structuring agent, and serves as placement agent along with Goldman Sachs, Santander U.S. Capital, Capital One Securities and HSBC Securities.
Situs Asset Management is the primary servicer.
ACREC allows for significant modifications to performing loans, Kroll Bond Rating Agency said. The transaction can also buy out defaulted assets and those with credit risks. The transaction will issue notes to investors through eight tranches of notes.
Classes A through E, do not allow for payment-in-kind, which allows borrowers to use assets other than cash—such as equity or shares—to make interest payments. Subordinate tranches F and G, however, do allow for that, according to the capital structure.
All notes have a stated maturity date of August 2042, while the loans have a fully extended remaining loan term of more than four years. The interest rate on the deal is capped at 6.67%, KBRA said. The properties have a stabilized appraisal loan-to-value (LTV) ratio of 65.7%, and issuer debt service coverage of 1.27x, the rating agency said.
KBRA assigns AAA to the A and A-S notes; AA- to the class B notes; A- to the class C notes; BBB to the class D notes; BBB- to the class E notes and BB- and B- to the F and G tranches.
