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SocGen Returns to U.S. CMBS

Societe General paired up with Wells Fargo to sell $659 million of commercial mortgage backed securities. The deal marks a return to U.S. CMBS for Societe General after an eight-year absence.

The securities were sold via Wells Fargo Commercial Mortgage Trust 2015-SG1. Fitch Ratings, Moody’s Investors Service and Morningstar rated the senior notes.

The 10-year, benchmark, super-senior, triple-A rated, class A-4 notes priced at swaps plus 120 basis points, according to a pricing document. The notes benefit from 30% credit enhancement.

The 10-year, class A-S, also rated triple-A but with lower credit enhancement at 24.25%, priced at swaps plus 145 basis points.

At the subordinate level, the double-A rated, 10-year, class B notes priced at swaps plus 200 basis points, the single-A minus, 10-year, class C notes priced at swaps plus 280 basis points and the triple-B minus, 10-year, class D notes priced at swaps plus 440 basis points. Moody's did not assign ratings on the junior notes.

The deal priced in line with JP Morgan and Barclays’  JPMBB 2015-C31, which printed last Thursday.

WFCMT 2015-SG1 has an unusually high concentration of hotel properties: they account for 23.3% of the pool. By comparison, the hotel exposure in other CMBS rated by Fitch this year averaged 16.2%.

The concentration of retail properties is even higher, at 35.8% of the pool. Office properties have the second and third highest concentrations in the pool.

Another factor setting this deal apart is how much is structured to pay down before maturity. It is scheduled to amortize by 14.5% of the initial balance before the bond is due. That’s above the average of 12.0% and 12.2% for deals rated by Fitch in 2014 and in 2015 to date, respectively.

Just 13 loans, representing 11.9% of the pool, pay only interest and no principal for their entire terms, while 23 loans representing 42.5% of the pool pay only interest for part of their terms. The remaining 36 loans in the pool are balloon loans.

In January, Societe Generale announced the hiring of an 11-person team from the Royal Bank of Scotland to outfit its U.S. CMBS originations desk. 

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