The Royal Bank of Scotland and Wells Fargo have begun marketing a $1.3 billion CMBS expected to be placed via the 144A market.

The transaction, WF-RBS Commercial Mortgage Trust 2011-C2, is backed by a pool of 50 commercial mortgages secured by 96 properties. The capital structure will include three 'AAAsf' tranches rated by Fitch Ratings. One loan representing 4.4% of the pool is expected to have an investment grade credit option of 'BBBsf' said Fitch.

The transaction has an LTV of 89.0%, which is higher leverage than recent fixed-rate transactions that Fitch rated in 2010.

The rating agency also said that the top 15 loans are of lesser quality than recent multiborrower transactions. Of the top 15 loans, only five received property quality scores of 'B+' or better. Of the top 10, only three are located in major metropolitan areas such as New York City and Los Angeles.

Meanwhile, last week DBRS issued a presale report on KeyCorp Real Estate Capital Markets' 144A deal called Waterfall Victoria Mortgage Trust Series 2011-SBC2. The $97.7 million CMBS is backed by 175 fixed and floating-rate seasoned loans secured by 175 multifamily, mixed-use and commercial properties. Citigroup Global Markets and Bank of America Merrill Lynch are managers on the transaction.

“I don’t know how long it’s been since a small balance [rated] commercial mortgage securitization happened, but it seems like it’s been a couple of years,” said Kevin Mammoser, senior vice president-CMBS and one of the DBRS analysts who worked on a presale report for the deal, Waterfall Victoria Mortgage Trust 2011-SBC2.

He told ASR's sister publication National Mortgage News that, to his knowledge, there had been at press time no other rated deals of this type seen in the CMBS market. But “some of this stuff can bounce between CMBS and ABS people, so there could be other deals that maybe aren’t being rated but are being sold,” Mammoser noted.

The roughly $82 million rated portion of the Waterfall deal, which is backed by performing first mortgages with an average 33 months of seasoning, could be another sign of recovery in the rebounding CMBS market that has picked up in activity over the past seven or eight months. But it also could be “just the availability of loans like this and a seller that is able to sell them,” he said.

Greystone Bank originated or purchased almost 95% of the loans in the deal, which overall have an average loan size of a little over $558,000. Lehman Brothers Bank originated the rest of the loans.

Almost 88% of the loans are located in New York or California markets and primarily located in mature neighborhoods with high barrier to entry and limited land available for development. More than 80% of the loans in the pool have adjustable rates. Multifamily and mixed-use properties with multifamily above a storefront located in the New York City, Los Angeles or San Francisco metropolitan statistical areas secure the majority of the loans.


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