Three offerings of commercial mortgage bonds, a single-loan deal and two conduits, have been announced this week, adding some $2.4 billion of supply. 

Blackstone Real Estate Partners VII, which is a U.S. focused real estate fund controlled by The Blackstone Group, plans to issue $425 million in securities backed by a single loan that is secured by Park Avenue Tower, a class A office building in Midtown Manhattan.

Deutsche Bank Securities and  Morgan Stanley have been mandated to lead the transaction.

Standard & Poor’s and DBRS assigned preliminary ratings to the deal, COMM 2014-PAT Mortgage Trust . The capital structure will offer $175 million of’ ‘AAA’/ ‘AAA’ rated class A notes, $41 million of ‘AA-’/ ‘AA’ rated class B notes;  $30.8 million of ‘A-’/ ‘A’ rated class C notes, $37.8 million of ‘BBB-’/ ‘BBB’ class D notes and $51.4 million of ‘BB-’/ ‘BB’ rated class E notes.  The trust will also issue $63 million of class F notes that DBRS expects to rate ‘B’. The $25 million class G notes will not be rated by either rating agency.

The underlying loan has an initial two-year term maturing Aug. 9, 2016, with three one-year extension options. The loan is interest-only for its term and has a floating interest rate equal to LIBOR plus 1.6071%.

COMM 2014-PAT has a weighted average loan-to-value ratio of 103.2%, which is higher than most single-borrower transactions S&P has rated recently. There is additional debt in the form of two mezzanine loans totaling $135.2 million, which increases LTV as measuerd by S&P to 136.0%.

Among the conduit deals is a $1.2 billion transaction dubbed COMM 2014-LC17 sponsored by Deutsche Bank and Cantor Fitzgerald, according to a deal document. Natixis, Citigroup and Nomura will act as co-managers.

COMM 2014-LC17 has been assigned preliminary ratings by Moody’s Investors Service, Fitch Ratings and DBRS. The trust will offer $54.8 million of ‘Aaa’/ ‘AAA’/ ‘AAA’, 2.34-year class A1 notes; $227.4 million of ‘Aaa’/ ‘AAA’/ ‘AAA’, 4.86-year of class A2 notes; $34 million of ‘Aaa’/ ‘AAA’/ ‘AAA’, 6.98-year class A3 notes; $190 million and 261.9 million of 10-year, ‘Aaa’/ ‘AAA’/ ‘AAA’ rated class A5 notes.

The subordinate, senior note, with credit enhancement at 23.3% has a maturity of 10 years and is rated ‘Aa1’/ ‘AAA’/ ‘AAA’. The 10-year class B notes are rated ‘Aa3’/ ‘AA’/ ‘AA’ and the 10-year class C notes are rated ‘A3’/ ‘A’/ ‘A’.

The transaction is backed by 71 fixed-rate loans secured by 207 commercial and multifamily properties. Two loans within the top 10, Loews Miami Beach Hotel and Aloft Cupertino, represent 12.5% of the pool.  

Hotel properties have higher cash flow volatility than traditional property types because cash flow is derived from daily contracts rather than multi-year leases, and their expenses, which are often mostly fixed, are quite high as a percent of revenue. “These two factors cause revenue to fall swiftly during a downturn and cash flow to fall even faster as a result of the high operating leverage,” stated the DBRS presale report.

Ten loans, representing 26.5% of the pool (including three in the top 10), pay only interest for the full loan term. An additional 27 loans, representing 32.9% of the pool, have partial interest only periods ranging from six to 60 months.

Wells Fargo and RBS are also marketing $795 million of securities backed by commercial mortgage loans, according to a deal document. The transaction, WFRBS Commercial Mortgage Trust 2014-C23, will offer $714 million of class A notes, offered over seven tranches that are rated ‘AAA’/ ‘Aaa’/ ‘AAA’ by Fitch Ratings, Moody’s and Morningstar, respectively.

The class B notes are rated ‘AA-’/ ‘Aa3’ / ‘AA-’ and the class c notes are rated ‘A-’/ ‘A1’/ ‘A-’.

The pool is comprised of 92 mortgage loans secured by 111 multifamily and commercial real estate properties. Although properties are distributed across 22 states and the District of Columbia; over 61% of the properties are located in three states including California, New York and Texas, according to the Morningstar presale report.

The largest loan exposure, Bank of America Plaza represents 12.4% of the portfolio balance. Approximately 16.1% of the pool is full-term interest-only, and 57.8% is partial-term interest-only. The rest of the pool consists of amortizing balloon loans with loan terms of five to 10 years. 

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