Wells Fargo began marketing a $1 billion conduit this week called Wells Fargo Commercial Mortgage Trust 2015-C26, but new issuance for the year to date is running short of forecasts.
With only two business days left in January there is approximately $6.5 billion of commercial mortgage bonds issuance in view, $4 billion of which has already priced. The month of February will have see another $15 billion worth of CMBS if the asset class is to reach the forecasted $21 billion for the first two months of the year.
The holdup, for this week at least, can be partly attributed to the record snowstorm that hit the Northeast on Tuesday, disrupting both the primary and secondary market activity. “Usually, extreme weather conditions lead to quiet days in the market,” said one market source. “We only had about $40 million out for bid yesterday.”
The annual industry conference in Las Vegas taking place over February 8 to 11 leaves an even shorter window of time, so the next month will have to be very busy to reach the forecast.
Bank of America Merrill Lynch CMBS analysts led by Alan Todd have already revised their forecast for the first two months of 2015. The analysts wrote in the bank’s latest securitization report that some deals that were originally slated to price this and next month are likely to be pushed out further in time. In total, the bank has now cut expectations for private label issuance in January and February to about $21 billion, $2 billion shy of the $23 billion originally slated to price over that time period.
“It’s a slowish start especially given projected supply,” said JP Morgan securitization analysts Edward Reardon in an e-mailed statement.
Wells Fargo's deal is backed by 100 fixed rate loans secured on 116 properties and underwritten by Liberty Island Group, Rialto, C-III Commerical Mortgage, Silverpeal Real Estate Finance, Basis Real Estate Capital II, National Cooperative bank, Walker & Dunlop and Wells Fargo.
The largest loan in the pool, Chateau on the Lake (4.8%) is a 301-key full-service hotel located in Branson, Missouri. The top five loans, also include Trails at Dominion (4.2%), JW Marriott New Orleans (4.1%), Broadcom Building (3.7%), and Aloft Houston by the Galleria (3.4%), represent 20.3% of the initial pool balance. The pool has a weighted average loan-to-value ratio of 99.8%, lower than the 119.4% LTV of the MSBAM 2015-C20 conduit, the first deal to price in 2015.
Kroll Bond Ratings is rating the deal.
In the chart below from BofA lists deals in the pipeline.