The deal, which is expected to close later this month, is solely led by Credit Suisse Securities.
The Series 2013-2 notes are backed by 406 commercial real estate properties across various industry sectors, including related rents due under triple-net leases and hybrid leases with the properties tenants.
Hybrid leases are composed of a ground lease—or sublease for properties in which the issuer has a ground lease interest—on the land and a mortgage on the building. They comprise roughly 6% of the pool.
S&P assigned preliminary ratings to the notes, rating the $204 million A notes A and the $14.5 million B notes BBB. The A notes have a loan-to-value ratio of 70%, while the B notes have a loan-to-value ratio of 75%. This provides credit enhancement in the form of subordination (for the class A notes) and overcollateralization.
The pool benefits from significant geographic diversity, having properties across 41 states. And the majority of the properties are subject to master leases, which may reduce the potential weakness of any individual property to generate income to support the notes, S&P notes.
However, the time needed to find replacement tenants upon lease expiration or termination may reduce cash flows, and a single industry, restaurants, represents more than 50% of the properties.