Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Wednesday, 04 April 2018

JPMorgan Tops CMBS Loan Contributor Ranking with 16 Percent Market Share

JPMorgan Chase Bank contributed 53.75 loans with a balance of $3.1 billion to CMBS transactions during the first quarter, meaning it originated nearly one of every six loans that were securitized during the period. Gross profits from securitizing mortgages declined from last year as loan spreads narrowed sharply.

Commercial Real Estate Direct Staff Report

JPMorgan Chase Bank contributed 53.75 loans with a balance of $3.1 billion to CMBS transactions during the first quarter, meaning it originated nearly one of every six loans that were securitized during the period.

Well behind it in a ranking of CMBS loan contributors was Deutsche Bank, which contributed 58 loans totaling $2.6 billion, for a 13.4 percent market share.

The loan-contributor ranking nearly mirrors a bookrunner ranking that was published earlier this week. It too had JPMorgan and Deutsche in the first two slots. But Citi was the third most-active bookrunner, while Goldman Sachs was the third most-active loan contributor.

The first quarter saw a slight increase in the number of lenders - 21 versus 19 during the same period a year ago. But that number will increase slightly in the months ahead as loans from other regular conduit lenders find their way into deals. Silverpeak Argentic, for instance, contributed 15 loans totaling nearly $170 million to CSAIL Commercial Mortgage Trust, 2018-CX11, which priced earlier this week.

Top Loan Contributors
Domestic, Private-Label CMBS

1Q2018

1Q2017

Lender

#Loans

Amt $mln

MktShr%

Amt $mln

MktShr%

JPMorgan Chase Bank

53.75

3,107.11

16.02

1,315.29

10.66

Deutsche Bank

57.93

2,596.35

13.38

1,589.02

12.87

Goldman Sachs

40.33

2,108.43

10.87

2,311.94

18.73

Citigroup

57.80

1,986.11

10.24

1,342.71

10.88

Barclays Bank

19.20

1,402.08

7.23

760.85

6.16

Credit Suisse

2.00

1,350.00

6.96

218.60

1.77

Morgan Stanley

30.40

1,010.82

5.21

887.33

7.19

Natixis

6.00

992.95

5.12

253.44

2.05

Wells Fargo Bank

41.35

976.15

5.03

698.04

5.65

UBS

33.00

831.65

4.29

446.06

3.61

Societe Generale

14.23

670.59

3.46

86.71

0.70

Cantor Commercial Real Estate

15.00

534.00

2.75

-

-

Bank of America

21.00

501.33

2.58

611.83

4.96

Ladder Capital

28.00

436.54

2.25

-

-

Starwood Mortgage Finance

17.00

231.82

1.19

168.32

1.36

Rialto Mortgage Finance

15.00

186.46

0.96

425.88

3.45

ReadyCap

50.00

164.96

0.85

-

-

CIBC World Markets

9.00

98.08

0.51

-

-

Benefit Street Partners

6.00

79.33

0.41

-

-

C-III Commercial Mortgage

22.00

79.07

0.41

28.45

0.23

NCB FSB

16.00

57.41

0.30

49.23

0.40

Principal Commercial

-

-

-

219.44

1.78

Silverpeak Argentic

-

-

-

171.94

1.39

 

555.00

19,401.24

 

12,343.84

 

Source: Commercial Real Estate Direct

Despite still low interest rates, roughly $8.8 billion, or 45 percent of the volume of loans securitized during the period had relatively short terms and paid floating coupons. Those were all securitized through single-borrower transactions and generally were backed by properties in some form of transition. The biggest of the bunch was the $1.35 billion loan that Credit Suisse's Column Financial unit, Wells Fargo Bank and JPMorgan had provided against a portfolio of 50 retail centers that DDR Corp. has spun off through Retail Value Trust, which expects to sell its assets over time.

The large single-borrower deals also included BBCMS Mortgage Trust, 2018-TALL, a $1.325 billion deal involving a loan originated by Barclays Bank and Deutsche against Chicago's Willis Tower, formerly the Sears Tower, that's owned by affiliates of Blackstone Group. The investment manager is in the process of investing nearly $670 million through 2020 on an effort to expand the property's retail component, upgrade its office space and add a sky deck. The plan is projected to increase the property's overall revenue by more than half.

Meanwhile, a number of single-borrower deals were backed by pieces of permanent loans, parts of which were scattered among conduits.

In most cases, single-borrower deals were only marginally, if at all profitable, according to information gleaned from offering documents. Those documents disclose the amount of proceeds from the sale of bonds for deals structured with either a horizontal or hybrid risk-retention scheme.

The seemingly most profitable single-borrower deal was CFCRE Commercial Mortgage Trust, 2018-TAN, which is backed by a $195 million loan against the 411-room Aruba Marriott Resort in Aruba. It generated just more than $205 million of proceeds from the sale of bonds, for a 5.14 percent profit margin.

Conduit transactions, meanwhile, generated margins of 0.15 percent to nearly 2 percent, with profitability hinging, naturally, on prevailing spread levels when a deal prices and the weighted average coupon of its collateral pool.

Profitability of 1Q CMBS Conduit Transactions

 

Bal $mln

Proceeds $mln

Profit
Margin %

WAC %

ssAAA

10-yr T

Benchmark Mortgage Trust, 2018-B2

1,507.01

1,509.22

0.15

4.219

S+70

2.86

UBS Commercial Mortgage Trust, 2018-C8

1,045.17

1,063.44

1.75

4.724

S+77

2.86

Wells Fargo Commercial Mortgage Trust, 2018-C43

733.45

738.41

0.68

4.649

S+76

2.87

GS Mortgage Securities Corp., 2018-GS9

887.13

896.68

1.08

4.388

S+79

2.82

UBS Commercial Mortgage Trust, 2018-C9

839.90

856.51

1.98

4.904

S+92

2.82

So while Benchmark Mortgage Trust, 2018-B2, priced at among the tightest spreads of the year, that wasn't enough to offset the low 4.22 percent coupon of its collateral pool. On the other hand, UBS Commercial Mortgage Trust, 2018-C9, saw the widest spreads of any conduit so far this year, yet the deal, on its face, was the most profitable. The coupon for its collateral loans was a hefty 4.9 percent.

The proceeds data outlined in offering documents might not include a number of revenue generators or costs, so they might not represent the actual profitability of any given deal. But the data could still be used to compare deals.

The five deals that priced during the quarter and had either a horizontal or hybrid risk-retention structure generated a weighted average profit margin of 1.03 percent. That compares with the 3.18 percent margin for the 29 similar deals that priced last year.

Last year's deals had coupons that amounted to an average of 195 basis points more than Treasurys. While CMBS mortgages typically are priced over swaps, Treasurys are used for the sake of convenience. This year, the average spread has been 168 bps, for a nearly 14 percent reduction.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.





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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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