Wells Fargo is launching a $764.4-million commercial mortgage-backed security (CMBS) that pools loans to a diverse group of properties, including hotels, manufacturing communities, and retail spaces across the U.S.
The Wells Fargo Commercial Mortgage Trust 2021-1 C61 (WFCM 2021-C61) has 39 tranches, of which 37 were rated stable by Fitch Ratings in a Nov. 15 pre-sale report. Nineteen of the tranches are rated ‘AAA,’ including tranches for $18.5 million, $108.1 million, $28.5 million, $175 million, and $204.9 million that each provide a credit enhancement level of 30%. Five of the tranches are rated ‘AA,’ six ‘A,’ four ‘BBB,’ two ‘BB,’and one ‘B.’
This transaction is the third transaction this year from this shelf, the report noted. To date, Fitch has rated 33 other transactions issued from the shelf and they all have been collateralized with comparable credit quality and assets, according to the pre-sale report.
WFCM 2021-C61 is somewhat larger than its $748.6 million predecessor, WFMC 2021-C60, but smaller than the $826.1 million WFCM 2021-C59 completed in April. The latest deal’s pool has 165 properties, significantly more than the 107 and 99, respectively, in the two earlier CMBS’.
The deal’s depositor is Wells Fargo Commercial Mortgage Securities. The sponsors, mortgage loan sellers and originators are LMF Commercial, LLC, Wells Fargo Bank, National Association Column Financial, Inc., UBS AG, Oceanview Commercial Mortgage Finance, LLC, Ladder Capital Finance, LLC and BSPRT CMBS Finance,
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The deal was underwritten by LLC. Siebert Williams Shank & Co, Wells Fargo Securities, UBS Securities, Credit Suisse Securities (USA), Academy Securities, Inc., and Drexel Hamilton, LLC.
The diversity of the pool is a plus, Fitch says. The 10 largest loans make up 45.5% of the pool's cutoff balance, which is a lower concentration than the averages in 2021 year-to-date and 2020 of 50.7% and 56.8 %, respectively, the report said.
Considering the coronavirus pandemic’s harmful impact on commercial real estate, Fitch’s outlook for the U.S. CMBS sector is negative, the report said.
The pool’s weighted average volatility score is 3.55 out of 5, which is above the year-to-date pool averages so far in 2021 and in 2020 averages, which were 3.26 and 3.2, respectively, according to the report. Three hotel loans, representing 3.7 % of the pool by balance, earned a ‘5’ volatility score because of the pandemic, property type and greater likelihood of cash flow problems, the report said
The properties include industrial, office multi-family, self-storage facilities, hotels and manufacturing facilities. Florida, New York, California, Texas and Michigan are the top five states, respectively, with regional concentration.
Single-tenant properties account for almost a quarter of the pool by cutoff balance, which is below the averages so far in 2021 and in 2020, of 24.1 % and 21.5%, respectively, the report said.
Fitch reviewed 81.5 % of the pool. The rating agency calculated an aggregate cash flow for the pool of $63.678 million, compared to the issuer’s aggregate cash flow for the same pool of $75.07 million, or 15.2% more than Fitch’s finding.
