Benchmark 2022-B32 is preparing to launch a $1.8 billion commercial mortgage-backed securities transaction, with 47 mortgages on 171 properties, mostly office buildings, serving as collateral.
JPMorgan Chase Bank, Citi Real Estate Funding, German American Capital Corp and Goldman Sachs Mortgage are underwriters in the transaction, along with sponsors, mortgage sellers and originators, according to a pre-sale report from Fitch Ratings.
The rating agency plans to award ratings ranging from “AAA” on the A-1 class of $6.4 million to “B-” on the H class of $16.8 million.
Office properties make up 60.8% of the pool, above the 41.2% average for 2020 transactions and the 36.5% average for 2021, Fitch noted. Issuers in the office subsector report a debt service coverage ratio (DSCR) of around 3.2x, while Fitch assigned a DSCR of 1.37. Issuers also typically report a loan-to-value ratio of 53.5%, while Fitch pegs the LTV at 94.8%.
On a weighted average (WA) basis, office properties have an occupancy rate of 93.5%. Desktop Collateral also has a WA property market metric (PMM) score – which measures a loan’s historical market and cash flow volatility – of 3.3, and a WA cash flow variance of 13.8 %.
After the office sector, commercial buildings account for 12.6%, which was actually down from the 2020 average of 16.3% and the 2021 average of 21.8%, Fitch said. As for the other types of representative goods, self-storage represents 8.6% of the stock; industry represents 7.5%; the hotel sector accounts for 5.7% and the multi-family sector accounts for 3.4%, according to Fitch.
The average loan size in the pool is $37.8 million, and the 10 largest loans in the collateral pool represent 51.7% of the pool, according to Fitch. Approximately 17.8% of the pool has an investment grade credit rating.
On a WA basis, the initial terms of the loan are 99.1 months and 1.3 months of running-in. According to Fitch, a large majority of loans, 88.2%, are interest-only and 8.2% of the pool are interest-only partial loans.
Overall, about 68.3% of collateral has a property quality rating of “A-” or better, Fitch noted. Meanwhile, 23.3% of the pool has a ‘B+’ rating and 8.4% has a ‘B’ rating.