CMBS prices are holding firm as dealers shop three CMBS deals totaling $3.22 billion, each with distinct loan underwriting characteristics and collateral quality. The three conduit offerings are a $1.1-billion deal by Deutsche Bank, Cantor Fitzgerald, KeyBank and Liberty Island (COMM 2013-CCRE13); a $1-billion issue by Wells Fargo, RBS, Liberty Island, Basis Real Estate Capital, National Cooperative Bank, UBS and C-III Commercial Mortgage (WFRBS 2013-C18); and a $1.1-billion transaction by JPMorgan, Barclays, GE Capital, Redwood Trust and RAIT Financial (JPMBB 2013-C17).
The Wells-RBS transaction has arguably the best underwriting characteristics and high collateral quality. The loan pool consists of 67 loans secured by 73 properties with a weighted average loan-to-value (LTV) of 54.4% and a weighted average Net Cash Flow Debt Service Coverage (NCF DSCR) of 2.48x. The loan pool NCF Debt Yield is 13.8%.
The Deutsche Bank-Cantor deal also provides good loan metrics. The loan pool consists of 53 loans secured by 73 properties with a weighted average LTV of 60.8% and a weighted average NCF DSCR of 2.10x. The loan pool NCF Debt Yield is 12.7%.
“We look for NCF DSCR of more than 2.0x and NCF Debt Yield of more than 12.0% when sourcing CMBS for our portfolio,” noted Jim Brett, head of CMBS analytics at ValueXpress. “Both of these deals hit the mark.”
The JPMorgan deal was more aggressively underwritten than the Wells-RBS and Deutsche Bank-Cantor deals. The JPMorgan pool consists of 64 loans secured by 72 properties with a weighted average LTV of 66.3% and a weighted average NCF DSCR of 1.49x. The loan pool NCF Debt Yield is 10.3%.
The Deutsche Bank-Cantor deal priced the deal’s long-term, super-senior bonds on Friday with a spread of 93 basis points (bp) over swaps, in line with recent offerings. The RBS-Wells and JPMorgan bonds were being marketed at the same levels; market participants were finding very strong demand for the RBS-Wells deal.