Starwood Sponsoring $760 Million CMBS

Mortgage & Real Estate

Starwood Capital Group Global LP as sponsor is putting a $760 million commercial mortgage-backed security deal in the pipeline, according to a Fitch Ratings presale report.

The $330 million Class A of SCG Trust 2012-SRP1 received Fitchs top expected rating with less than 57% credit enhancement and the remaining seven classes lack ratings. Two are unrated interest-only classes with only notional amounts. The certificates have a sequential pay structure.

The pass-through deal consists of beneficial interests in a three-year loan, floating-rate loan that has two one-year extension options. Five mall properties acquired with the loans proceeds cross-collateralize the mortgage. The malls are located in Toledo, Ohio; West Covina, Calif.; El Cajon, Calif.; Olympia, Wash.; and North Olmsted, Ohio. Starwood Retail Properties is the property owner and manager.

All the properties have JCPenney as anchor tenants and three also have Sears as an anchor tenant. This exposes them to some risk as both have had declining sales and store closures in recent years, Fitch notes.

However, all of the JCPenney stores and two of the three Sears stores reported gross sales for the trailing 12 month period ended August 2013 above their respective national chain averages, Fitch analysts said in the presale report.

The largest tenant represents less than 3% of total base rental income and the tenancy and locations are diverse, according to Fitch. The properties have average asset quality and are located in secondary U.S. markets, Fitch finds.

Barclays is the depositor and one of the co-lead managers. The other co-lead managers are the Royal Bank of Scotland and JPMorgan Chase. Deutsche Bank is the note trustee. Wells Fargo is certificate administrator and custodian as well as the master and special servicer.

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