Wells Fargo is marketing $774 million of securities backed by a pool of 62 commercial mortgage loans.
WFCM 2015-NXS4 is more highly leveraged than many other recent CMBS conduits because the collateral pool doesn't include any investment grade loans.
The pool has a weighted average (WA) loan-to-value ratio, as calculated by Kroll Bond Rating Agency, of 103.7%. That is slightly above the 102.7% average of the 26 CMBS conduits rated by Kroll over the last six months. These transactions had in-trust KLTVs ranging from 96.7% to 108.6%.
However, the collateral pool of 18 of the last 24 deals rated by Kroll included an investment grade loan, which lowered the pool's overall leverage.
The collateral for these deals also included a higher proportion of highly leverage loans. WFCM 2015-NXS4 has only 36 loans (63.9% of the pool) with LTVs in excess of 100%. By comparison, highly leveraged loans comprised 68.7% the pools backing recent deals rated by Kroll in the past six months, on average.
In total, the pool of loans backing WFCM 2015-NXS4 is secured by 73 properties. The pool’s lodging exposure (18.9%) is higher than the average of the CMBS conduits rated by KBRA over the last six months (15.4%). The lodging exposure for these deals ranged from 3.7% to 23.7%. Hospitality assets can have more volatile cash flows than other property types due to their dependence on nightly room rates. The largest property representation in the pool is retail (30.7%); and the second largest is office properties (12.4%).
The largest loan in the pool is sized at $70.0 million and is secured by One Court Square a 1.4 million square foot, Class-A, office building located in Long Island City, New York, approximately one mile east of Manhattan.
The loans have a WA life of 8.6 years and more than half of the pool pays only interest for at least a part of the term: 33 loans pay only interest for only part of the term and 24 loans pay only interest for the entire term.
Kroll plans to assign 'AAA' ratings to the super senior notes on offer that benefit from 30% credit enhancement; and 'AAA' ratings junior/senior note that benefits from 24.75% credit enhancement.
