Banks are marketing $2.8 billion of bonds backed by three mortgages used to finance the purchase of industrial property portfolio from the Blackstone Group by Global Logistics Properties and GIC PTE.
A joint venture between Global Logistics Properties and GIC PTE is the loan sponsor, or borrower, in all three cases and Goldman Sachs, Bank of America and Morgan Stanley the underwriters in all three loans, according to Morningstar.
Blackstone created IndCor to acquire high quality assets in strategic locations within core markets. The portfolio comprises 722 properties in 23 states, comprising approximately 115.2 million square feet.
The total purchase price of the portfolio was approximately $8.2 billion, of which $3.3 billion was financed by cash equity and $4.9 billion was borrowed. Global Logistics Properties has 55% ownership and GIC PTE has 45% ownership.
Core Industrial Trust 2015-WEST, the first of the three deals, is backed by an $822 million, 10-year loan that is secured by 120 industrial properties. The collateral is primarily located in Nevada, which represents 53.3% by allocated loan amount, and seven additional states.
The loan pays only on interest for its entire term and has a loant-to-value (LTV) ratio, as calculated by Morningstar, of 94.3%. These two features combined usually indicate that the borrower may not be able to refinance the full loan amount at maturity. However based on the assets included in Core Industrial Trust 2015-WEST, transaction is well cushioned by $412.5 million of cash equity, according to Morningstar.
“A sponsor with new cash equity may have a longer time horizon, and thus, a stronger commitment to invest in the assets,” stated the presale report.
A second deal, called Core Industrial Trust 2015-TEXW, is backed by a $632 million, seven-year loan that pays only interest for the entire term. The loan has an LTV of 95.32%
A pool of 150 industrial properties that comprise 16.1 million square feet secures that loan. The collateral is primarily located in Texas, which represents 78.1% by allocated loan amount. The Texas properties are concentrated in Austin, Dallas and El Paso.
The assets in the portfolio are mostly of institutional quality, located in primary markets with good access to major highways but generally low barriers-to-entry.
The third securitization, Core Industrial Trust 2015-CALW, is backed by $1.342 billion, seven-year loan that is collateralized by a pool of 154 industrial properties that comprise 23.0 million square feet. The loan also pays only interest for its entire term and an LTV of 92.3%
The collateral is primarily located in California, which represents 67.7% by allocated loan amount. The largest geographic concentration is in the Los Angeles basin, which represents 39.2% of the collateral and the second-largest concentration is in San Francisco Bay Area, which represent 19.8% of the collateral. These markets are densely developed and have high barriers to entry.