According to Commercial Mortgage Alert, demand easily outstripped supply for the $788.5-million CMBS conduit issue from Goldman Sachs, Citigroup and Starwood Property that rolled out on August 4. The issue collateral consists of 23 mortgages secured by 40 properties. The majority of the collateral (78%) comprises retail properties. The weighted average coupon is 6.08%. The $232-million Class A1 tranche (Aaa/AAA), with a 4.96 weighted average life was shopped at 125 basis points (bp) over swaps (~3%), 5 bp tighter than initial pricing guidance. The $410.6-million Class A2, with a 9.9 weighted average life, priced at 135 bp over swaps (~4.2%). Spreads on the $27.6-million junior Class B and $35.5-million Class C also narrowed by 10-35 bp at swaps plus 190 (~4.8%) and swaps plus 265 (~5.6%), respectively.
The bonds were 2-3 times oversubscribed at the initial pricing guidance and even after dealers pulled in spreads, Class A1 was 2.25x oversubscribed and Class A2 was 1.75x oversubscribed. Elliott Management acquired the B-piece after strong competition.
“This is another great milestone in the recovery of the CMBS conduit loan business,” noted Michael D. Sneden, Executive Vice President at ValueXpress. “It is clear there is tremendous demand for CMBS. It is now up to us, the origination machine, to find and close loans to feed the issuers,” commented Sneden.
