Commercial Real Estate Direct Staff Report
The year's first CMBS conduit deal has been launched.
The transaction, Benchmark Mortgage Trust, 2018-B1, which is being issued under a Deutsche Bank shelf, includes loans contributed by Deutsche, JPMorgan Chase Bank and Citibank. The $1.17 billion deal marks the first time the three have partnered on a conduit transaction.
Deutsche long had teamed separately with Citi and JPMorgan, but the three never had participated together on a conduit transaction.
Meanwhile, the deal's issuers have provided price guidance of 69 basis point more than swaps for the benchmark class, with the highest possible ratings and a 10-year average life, and 90 bps more than swaps for its junior-AAA class.
If achieved, they would be the tightest spread levels for a CMBS 2.0 transaction, and would best the previous low-spread transaction, Citigroup Commercial Mortgage Trust, 2014-GC23, by 2 bps. That deal priced in July 2014, when the 10-year Treasury was yielding 2.5 percent. Today, the Treasury yields 2.62 percent. They also would compare with a spread of 87 bps more than swaps for the last conduit deal that priced.
The latest transaction has a hybrid risk-retention structure, with Deutsche keeping a 3.47 percent vertical strip and Eightfold Real Estate Capital buying $54.9 million of bonds, or 4.7 percent of the deal, by par value, at a price that would yield 19.77 percent. Eightfold, a Miami investment manager, is buying the bonds through its Eightfold Real Estate Capital...
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