Wells Fargo plans to sell $740 million of commercial mortgage bonds with heavy exposure to multifamily properties.
Over 34% of the pool of loans backing Wells Fargo Commercial Mortgage Trust 2015-C30 is secured by multifamily properties; that’s higher than the average concentration for CMBS printed in 2014 (15.8%) or for 2015 to date (16%), according to Fitch Ratings.
Multifamily properties are among the least risky property types in CMBS; they have a below average probability of default in Fitch’s multi-borrower CMBS model.
The pool also contains 18 loans (6.5% of the pool) secured by multifamily co-ops. All of the multifamily co-ops are located in New York, within the New York City metro area. The weighted average loan to value ratio for these co-ops, as calculated by Fitch, is 30.3%.
The multifamily collateral pushes the pool’s weighted average Fitch LTV to 104.9%, which is below other recent Fitch-rated transactions. The 2014 and YTD 2015 average Fitch LTVs were 106.2% and 109.3%, respectively. However, excluding co-op collateral, the pool’s Fitch LTV increases to 110.1%.
Loans secured by retail and hotel properties are the third largest concentrations of the pool.
Wells Fargo's most recent transaction from this series, the 2015-C29 deal, which was completed in June, pooled loans with a WA Fitch LTV of 107%.
The 2015-C30 trust will offer five tranches of AAA’ rated class A notes that benefit from 30% credit enhancement. The mezzanine level senior notes, structured with 23% credit enhancement are also rated AAA’. At the subordinate level the trust will offer five tranches rated from AA-’ to B-’.
The pool is scheduled to pay down 14.6% of the initial balance prior to maturity, which is better than the average of other recent Fitch-rated, fixed-rate conduit transactions. Five loans (11.1% of the pool by balance) pay only interest for their entire term and 37 loans (46.3% of the pool) pay only interest for part of their terms. By comparison, Fitch-rated transactions in 2014 and YTD 2015 had full-term interest-only concentrations of 20.1% and 23.2%, respectively, and partial interest-only concentrations of 42.8% and 43.6%, respectively.
The transaction pools loans originated by Well Fargo Bank , Rialto Mortgage Finance, C-III commercial Mortgage, Basis Real Estate Capital II and National Cooperative Bank.
Wells Fargo Securities, Deutsche Bank and Morgan Stanley are the lead underwriters.