© 2024 Arizent. All rights reserved.

Newman structures Sun Life's first private non-rated CMBS

After having explored the gamut of commercial mortgage transactions in recent years, from traditional CMBS to parri passu participation sales, Sun Life Financial and its investment banker, Newman & Associates, Inc. have recently closed on a private, non-rated securitization for $181 million, backed by seasoned, high quality mortgages.

The securitization was structured as a senior/subordinate A/B transaction, whereby Newman privately placed the 91% senior class to a single institutional investor. Sun Life Financial retained the 9% subordinate class, an I/O strip and servicing of the loans.

"What made this deal unique is the fact that it had many, if not most, of the attributes of a traditional CMBS deal, but it was non-rated and privately negotiated between the investor and the issuer," said Stuart Salins, executive vice president of Newman & Associates, a subsidiary of GMAC Commercial Mortgage. "Moreover, it achieved a price execution close to comparable double-A rated CMBS."

The pool was comprised of 42 loans, collateralized by retail, office, industrial and multifamily properties located in 18 states. The average life of the pool was 7.25 years, with an average of approximately three years of seasoning, and an average loan size of $4.3 million. According to Salins, the collateral consisted of low-leverage loans with short amortization schedules.

"This was different from a [traditional] CMBS transaction," Salins said. "The deal started in the middle to latter part of October and took just a little over 60 days to complete. And it is different from a cost standpoint, since there was no rating agency cost, and the legal expenses are vastly different. Still, it resulted in strong overall execution." The deal was closed at the end of the year, he added, but some post-closing matters had to be addressed in early January.

Noting that there has been a considerable amount of business recently for Newman's parent company, GMAC Commercial Mortgage, Salins was quite bullish on the outlook for real estate this year. "We feel that there are still a number of institutions and banks that have portfolios and will seek to modify it, reduce exposure or create higher yields," he said. "A substantial amount of business should emanate from institutions...with higher risk loans and higher yielding loans."

While many Wall Street firms only focus on CMBS or whole-loan sales, Newman & Associates has covered the gamut of transactions in recent years, structuring and implementing a variety of exit strategies for its clients.

"We look at a transaction creatlively," Salins said.

For reprint and licensing requests for this article, click here.
MORE FROM ASSET SECURITIZATION REPORT