J.P. Morgan and Barclays are selling securities backed primarily by office properties in a joint-led conduit dubbed JPMBB 2015-C30, according to Kroll Bond Ratings Agency.
The largest loan in the $1.33 billion pool, for $90 million, is secured by One Shell Square, a 1.2 million square foot, Class-A office tower located in the central business district of New Orleans, Louisiana.
Nearly 50% (45.9%) of the pool is comprised of office properties. Approximately half (25.4%) of the pool’s office exposure is the central business districts of eight cities, including New Orleans (6.8%), New York (6.0%) and Houston (4.0%). The remaining office exposure (19.2%) is comprised of suburban properties.
A total of 70 loans that are secured by 150 properties make up the conduit pool.
Office properties in central business districts are by far the best performing segment of the commercial property market; data published by Moody’s Investors Service this month indicate that at the end of May, prices had risen by 12.1% over the previous three months. “There has been an abundance of capital chasing CBD office property, particularly in major markets,” Moody’s stated in the report.
Kroll has assigned preliminary AAA’ ratings to two tranches of JPMBB 2015-C30, the super senior notes, which benefit from credit enhancement of 30%, and the senior notes, which have less credit enhancement at 22.7%.
At the subordinate level, the trust will offer notes rated from AA- to B.’
All of the notes have a final maturity date of July 2048.
The loans used as collateral pay, on average, an interest rate of 4.33% over a 10-year term; 19% pay only interest for their entire terms and 53% pays only interest for part of their terms.
The loans have a weighted average loan to value ratio, as calculated by Kroll, of 102.3%, which is lower than the average (103.1%) of the 19 CMBS conduits KBRA rated in the last six months. These transactions had KLTVs ranging from 97.5% to 107.5%.
Two loans in the pool are responsible for bringing the average LTV down; they are secured by a Hawaiian mall, Pearlridge Center, and an Arizona based mixed-use retail center, the Scottsdale Quarter, which have low in-trust KLTVs of 49.5% and 56.7%, respectively. Excluding these loans, the pool’s weighted average in-trust KLTV is 107.0%, the higher end of conduits Kroll rated in the last six months.
Both of the low-LTV properties in JPMBB 2015-C30 also secure loans pooled in separate deal, the J.P. Morgan, Deutsche Bank led WP Glimcher Mall Trust 2015-WPG. This large loan CMBS began marketing on June 26. In total the pool backing JPMBB 2015-C30 includes eight “split” loans representing 31.2% of the total pool backed by properties securing “companion” loans not in the pool.
Loans in the pool were originated by JPMorgan Chase Bank (29 loans, 67.5%), Barclays Bank (20 loans, 15.6%), Starwood Mortgage Funding II (8 loans, 6.2%), Redwood Commercial Mortgage Corp. (8 loans, 6.1%), and MC-Five Mile Commercial Mortgage Finance LLC (5 loans, 4.6%).
Nearly half of the loans were used to refinance existing debt (46 loans, 46.0%). Proceeds from the remaining loans were used for the purposes of property acquisition (21 loans, 45.0%) and recapitalization (3 loans, 9.0%).