Industrial properties highlight $792M Goldman CMBS transaction

Mortgage

Acquisition financing for a portfolio of multi-state distribution centers represents the largest chunk of a newly launched Goldman Sachs conduit commercial-mortgage securitization of more than $914 million in recently issued loans.

The $78 million loan covers three single-tenant industrial sites — including an Amazon fulfillment center in Charleston, Tenn. — and covers a portion of the $202.9 million purchase by a South Korean investment firm.

The loan is the largest obligation among 35 commercial mortgages secured by fee and leasehold interest in 44 properties across 19 states, according to presale reports on the GS Mortgage Securities Trust 2019-GC40 transaction.

Goldman will market $792 million in bonds backed by the properties, including five super-senior Class A term notes totaling $615.9 million. All of those notes are supported by 30% credit enhancement, with preliminary AAA ratings from four ratings agencies: SP Global Ratings, Morningstar Credit Ratings, Fitch Ratings and Kroll Bond Rating Agency.

All of the loans were originated by Goldman Sachs, Citi and Deutsche Bank’s German American Capital Corp.

In addition to the Amazon site, the industrial centers financed in the Diamondback Industrial Portfolio 2 loan are a Nestle distribution center in Breinigsville, Pa., and a Winchester, Va.-based Home Depot warehouse.

The $78 million loan is actually one of two loans secured by the property in the trust: a $20 million Diamondback Industrial Portfolio 1 loan is the 14th largest in the pool. Both loans combined with $61 million in external pari passu debt and $77.4 million sponsor cash equity from to finance the majority-share purchase by Korean investment firm Tiger Asset Management. The portfolio is also 20% owned by publicly traded real estate company Vereit.

The transaction features a loan portfolio of distribution centers, such as an Amazon fullfilment center in Charleston, Tenn.

The transaction features a loan portfolio of distribution centers, such as an Amazon fullfilment center in Charleston, Tenn.

Bloomberg

Other large loans in the pool include a $75 million, 10-year refinance loan for a mixed-use, 12-story office building in Brooklyn, N.Y. (250 Livingston), and a $75.9 million loan for an office/retail Hawaiian property near Honolulu’s central business district. That Waterfront Plaza loan in Hawaii also refinances debt, plus provides a $5.1 million cash-equity payout to the deal sponsor, The Shidler Group.

The presale reports noted the transaction has a high 60.1% concentration in primary markets, including eight properties in New York making up 26.7% of the trust’s pool balance. Over 32% of the properties are offices, and 34.3% — or 21 properties by pool balance — are single-tenant obligations.

The pool is also top-heavy in large loans, with the 10 largest loans making up 62.4% of the balance.

Morningstar notes the deal has a “barbell” structure with 15 of the lowest-leverage, high-quality asset loans potentially offset by a segment of lower-quality, high-leverage properties backing 12 loans that make up 23.4% of the pool balance.

Twenty-three loans making up nearly 75% of the pooled trust balance are interest-only for their entire loan terms, according to the reports.

The properties have moderate leverage (with an 87.1% loan-to-value ratio estimate by SP), but have higher-than-average debt service coverage at 2.15x.

Twenty-three loans (74.4% of the pooled trust balance) are interest-only for their entire loan terms, including eight of the top 10 loans. According to Fitch, the weighted average mortgage rate of 4.18% is below the average 4.77% for Fitch-rated conduit multiborrower transactions.

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