UBS Investment Bank and Deutsche Bank are on the market with a $350 million single-property, commercial mortgage-backed securitization that is backed by a single loan collateralized by Westfield Montgomery, a super-regional mall located in Bethesda, Maryland.
The deal, WFLD 2014-MONT Mortgage Trust, is backed by a 10-year, 3.8% fixed-rate, interest-only mortgage loan. There is no subordinate debt or mezzanine financing related to this transaction, according to Morningstar and Standard & Poor’s.
Westfield Montgomery is located 12 miles northwest of Washington D.C. and has exhibited a strong performance over the past few years. Since 2009, in-line occupancy has not dropped below 89.6%.
Among the deal’s strengths is the relatively low leverage—a 69.0% loan-to-value, which is in line with or below most S&P-rated single-borrower transactions this year. Lower leverage implies higher borrower equity levels, less default probability, and less overall loss severity if a default occurs.
However, the mortgage loan is interest-only for the entire term and therefore bears a higher refinance risk because of the relatively higher loan balance at maturity.
The $228.1 million class A notes were assigned AAA’ / AAA’ provisional status from S&P and Morningstar. The $50.7 million class B notes were rated AA-/ AA’, the $38 million class C notes A-’/ A’ and the $33.2 million class D notes BBB-’/ BBB’.
UBS Real Estate Securities and German American Capital are the mortgage loan sellers for the transaction.
The borrowers under the mortgage loan are Montgomery Mall Owner LLC and Montgomery Mall Condo LLC,. The borrowers are approximately 50% owned by Westfield America, Inc and approximately 50% owned by T-C Montgomery Mall LLC, a joint venture between Teachers Insurance and Annuity Association of America, or TIAA and Stichting Pensioenfonds APG.
Westfield is a real estate investment trust with interests in 38 shopping centers across the US, reporting a $68.3 billion portfolio value and encompassing 90.4 million square feet of retail space.
TIAA’s real estate investments include over $502 billion of assets under management, while APG, a pension fund for the Netherlands’ government employees, has approximately 309 billion in invested capital.