Wells Fargo is marketing another offering of commercial mortgage bonds that relies on a few relatively high quality loans to boost the overall credit metrics of the collateral pool.
The deal, dubbed Wells Fargo Commercial Mortgage Trust 2016-C36, will issue $858 million of commercial mortgage bonds backed by 73 mortgage loans that are backed by 98 multifamily and commercial real estate properties.
Among the deal’s strengths, according to both Morningstar Credit Ratings and Fitch Ratings, is the fact that it is only moderately leveraged, by recent standards. Morningstar puts the beginning loan to value ratio, or BLTV, at 82.4% and the ending loan to value, or ELTV, at 70.9%. That’s lower than any CMBS transactions rated by Morningstar since 2013.
However, we the numbers are somewhat skewed by cooperative loans, which account for 8.44% of the pool and reflect loan-to-value ratios that are significantly below the portfolio average.
The pool contains 10 loans (8.4% of the pool) secured by multifamily cooperatives. Nine of these are located within the greater New York City metro area, and the remaining one is located in Suffolk County, Long Island. The weighted average Fitch DSCR and Fitch LTV of the co-op loans are 2.91x and 54.1%, respectively.
Two other loans in the pool, Easton Town Center (5.2%) and Gas Company Tower & World Trade Center Parking Garage (1.7%) have investment-grade credit opinions.