MONDAY, 25 OCTOBER 2010
Commercial Real Estate Direct Staff Report
Wells Fargo and Bank of America have launched a $735.9 million CMBS transaction, marking the sixth conduit of the year.
The transaction, Wells Fargo Commercial Mortgage Trust, 2010-C1, is comprised of 37 loans on 59 properties that were originated by BofA, Wells and Basis Real Estate Capital, a lender led by Tammy K. Jones, formerly Tammy Heyman, who previously launched CWCapital’s conduit-lending operation and before that ran what was then GMAC Commercial Mortgage’s conduit. Basis is affiliated with JEMB Realty Corp., a New York investor led by Morris Bailey, and owns and operates some 8 million square feet of commercial space in the United States and Canada.
While loans on retail properties comprise the biggest property type concentration, at 33.3 percent of the deal, it’s the smallest concentration of retail loans compared to the rest of the year’s conduit transactions. The five previous conduits have had an average retail concentration of 65 percent, with a range of 44.9 percent for COMM, 2010-C1, to 78.2 percent for GS Mortgage Securities Trust, 2010-C1.
That alone should bode well for the transaction, which is expected to price in the coming few days. Also benefiting it is the conservative underwriting of the collateral loans. The deal’s 37 mortgages have an underwritten debt-service coverage level of 1.82x and loan-to-value ratio of 58.3 percent. Those are slightly more conservative numbers than the COMM transaction had.
And while spreads on the secondary market have gapped out as a result of a relative flood of bid lists, spreads for primary issuance have tightened because of the relative dearth of new issues. Super-senior AAA bonds for generic bonds on the secondary market ended last week at a median spread of 296.5 basis points over swaps, up from 280 bp over swaps the week before. At the same time, however, Deutsche Bank sold the 10-year AAA bonds from the COMM deal at a spread of 140 bp over swaps. That compares with a spread of 150 bp over swaps for JPMorgan Chase Commercial Mortgage Securities Trust, 2010-C2, which priced two weeks earlier.
The largest loan in the upcoming Wells/BofA deal has a balance of $184.3 million and is backed by 14 office, industrial and data center properties owned by Dividend Capital Total Realty Trust. The debt is part of an $859 million financing package that Wells and BofA had provided to the Denver REIT to facilitate its $1.35 billion acquisition of a portfolio of 32 office and industrial properties from iStar Financial Inc.
Comments? E-mail Orest Mandzy, or call him at (215) 504-2860, Ext. 211.