Editor’s Note: This is good news to read. Hopefully this becomes a regular occurrence in the commercial real estate and finance space. It will be good to see capital from investors to come back to this shunned part of the market. More news to come.
Dow Jones - J.P. Morgan Chase Commercial Mortgage Securities Corp. has priced its $716.3 million commercial mortgage bond, the first deal since the credit crisis of 2008 to include a below-investment-grade slice.
The top-rated tranche worth $416.12 million sold at 140 basis points over swaps to yield 3.604%. This portion has a weighted life average of 4.53 years.
The pricing was “fair,” said Paul Norris, senior portfolio manager at Dwight Asset Management in Burlington, Vt. “It’s neither very cheap nor very expensive, it’s right in the middle.”
This is the second commercial mortgage bond sold this year, and the fifth since the crisis. As with each of the new deals, this one has several features that were typical in securities issued during the market’s peak in 2006: It includes loans to multiple borrowers and on differing property types.
Despite the continued rise in delinquency among commercial real estate loans–to nearly 10% from below 1%–securitization of these mortgages got a boost after three deals sold in quick succession last year to strong investor demand.
“We expect more deals to come, but it will take time because of the due diligence being done on any structured finance deals,” Norris said. “The average start to finish time is four to six months for any structured products deals.”
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