Wells Fargo’s next commercial mortgage securitization follows a familiar pattern: it is characterized by low leverage, relative to transactions completed this year. And it relies on the inclusion of a pair of relatively high quality loans to boost the overall credit metrics of the pool.
Fitch Ratings puts the loan-to-value ratio of the $750.5 million Wells Fargo Commercial Mortgage Trust 2016-C37 at 103.4%. That’s slightly better leverage than other recent Fitch-rated transactions, which average 105.5%.
The Fitch debt service coverage ratio for the trust of 1.21x is similar to the YTD 2016 average of 1.20x.
But those metrics are boosted by two loans, Hilton Hawaiian Village (7.0% of the pool) and Potomac Mills (4.8%), with investment-grade credit opinions. Hilton Hawaiian Village has an investment-grade credit opinion of BBB– on a stand-alone basis. Potomac Mills has an investment-grade credit opinion of BBBs on a stand-alone basis.
Excluding these two loans, the pool’s Fitch DSCR and LTV are 1.16x and 108.9%, respectively.