The seventh installment of the Ready Capital Mortgage Trust is slated to come to market, to raise $276.8 million in commercial mortgage-backed securities (CMBS) from a portfolio of 30 small- and mid-balance loans in 1B and 2A markets.
Ready Capital Corp., or ReadyCap, a subsidiary of Sutherland Partners, is sponsoring the transaction; the company originates small-balance commercial (SBC) loans, and such loans—with balances of less than $10 million—make up about one-third (31.5%) of the pool balance, according to Kroll Bond Rating Agency.
U.S. Bank Trust is the trustee and certificate administrator, according to a pre-sale report from KBRA. Key Bank will act as servicer and master servicer on the notes, the rating agency said.
Among the deal’s strengths is a seasoned collateral pool. In terms of the pool’s balance, half of the loans were originated prior to the onset of the COVID-19 pandemic, and mainly in Q1 2020, KBRA said. On a weighted average (WA) basis, they were seasoned for a period of 2.4 years. Classes A and B, which will issue $182.6 million and $21.7 million in notes, respectively, also have interest-only portions.
Thirty-six properties financed by 30 loans and 20 sponsors comprise the pool, and among the top 10 collateral properties is the Stater Brothers Plaza, a 73,641 square-foot, grocery-anchored retail center in Chino, Calif., KBRA said. The shopping center was developed in 2008, and Stater Bros. Market, a privately owned supermarket chain, anchors it. The market accounts for 50% of the property’s base rent, and as of July 2021, the plaza had an occupancy rate of 96.6% and 14 tenants.
Retail properties represent 43.5% of the pool concentrations by property type, and Stater Plaza has the highest concentration of the retail properties, KBRA said. Industrial is the next-highest property type, with 20.1%; followed by office, with 15.6%; then multifamily, 10.2%; and other, at 10.6%.
Just 10% of the properties in the pool are located in 1A markets, KBRA notes, while a combined 52.3% are in 1B and 2A markets.
KBRA expects to assign ratings ranging from ‘AAA’ on the A notes to ‘B-‘ on the F notes. Moody’s Investors Service expects to assign ‘Aaa’ on the $182.6 million A class notes through ‘A3’ on the $17.2 million C notes, plus ‘Aaa’ on the IO-A class.
