Wells Fargo is teeing up a $711 million CMBS conduit featuring a heavy concentration of loans secured by buildings with a single tenant.

Wells Fargo Commercial Mortgage Trust 2015-LC20 will issue seven classes of notes with preliminary triple-A ratings from Morningstar and DBRS; it will also issue  ‘AA-‘/ ‘AA’ rated class B notes and ‘A-‘/ ‘A-’ rated class C notes.

Of the 68 loans backing the deal, 18 (21.0% of the pool) are secured by properties that are fully leased to single tenants. They include three of the 10 biggest loans in the pool.

The loans, sponsored by Ladder Capital Finance, Wells Fargo and Silverpeak Real Estate Finance, are collectively secured by 122 multifamily and real estate properties. 

Loans secured by properties occupied by single tenants are at risk of higher loss severities in the event of default. Morningstar said in the presale report that “it is somewhat atypical to see the largest loan in the pool secured by a single tenant (albeit multiple locations).”

However the single tenant buildings have some high quality tenants, includings Hanesbrands, Walgreens and Dollar General.  In most cases the tenants have leases that extend beyond the maturities of the loans on the buildings, according to DBRS.

Ladder Capital’s Walgreens Portfolio, the second largest loan in the pool, includes 29 Walgreens located in 12 states. The properties are all 100% occupied on long-term leases that extend more than four years past loan maturity. The second-largest single-tenant loan is secured by a portfolio of eight properties leased to DS Services of America, Inc. on leases that expire in 2034, nearly 10 years past loan maturity.

Elsewhere in the CMBS market, Deutsche Bank priced its $1.3 billion COMM 2015-CCRE22 conduit this week, according to a pricing document. The benchmark, 10-year, super senior notes pay swaps plus 86 basis points. The notes have credit enhancement of 30%.

The senior AM notes, which feature lower credit enhancement of 23.7%, priced at swaps plus 115 basis points.

By comparison, Wells Fargo paid swaps plus 87 basis points for the 10-year, super-senior bond issued by Wells Fargo Commercial Mortgage Trust 2015-C27, the only other conduit CMBS to have priced in March.

COMM 2015-CCRE22 has exposure to the historic Standard Oil building in lower Manhattan and is backed by 59 commercial mortgages that are secured by 74 properties. Moody’s Investor Service, Fitch Ratings and Kroll Bond Ratings assigned preliminary ratings to the deal.

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