Facebook office tower expansion leads Barclays CMBS deal

A Silicon Valley mega-office-tower complex that is home to both Amazon and Facebook corporate offices is making another appearance in a conduit commercial mortgage-loan securitization.

Sunnyvale, Calif.-based Moffett Towers recently leased out two newly constructed towers that were built-to-suit for Facebook on a 13.4-acre site. The towers were funded with a $590 first-lien and mezzanine debt package financed by Barclays, Deutsche Bank and Goldman Sachs, according to a presale report from Kroll Bond Rating Agency.

A $65 million portion of the first mortgage-loan from the debt is being applied to the $937 million BBCMS 2019-C4 transaction, in which it rates as the largest transaction among 73 commercial real estate mortgages bundled into the deal.

According to Kroll, the two buildings are among three that Facebook will take 100% occupancy, under leases that were signed in May and June this year. All three buildings are still undergoing internal renovations, Kroll’s report stated.

The loan was issued to the firm of local real estate developer Jay Paul, who is taking $114.3 million of cash equity in the debt transaction.

The trust will issue 21 classes of notes will be issued, of which 14 will receive principal and interest proceeds. Seven Class A notes tranches received preliminary AAA ratings from Kroll.

The 73 mortgages in the conduit deal mortgages are themselves are secured by 377 properties owned by 69 sponsors. The average loan coupon is 4.4% with remaining terms of 9.7 years. Nearly half (48.8%) of the loans are full-term interest only.

Twenty of the loans are portfolio loans of multiple properties making up 35.3% of the pool, four of which are among the top 10 loans.

About 32.4% of the pool balance is tied to office-property mortgages, and a higher-than-average 17.9% are exposed to lodging properties. Another 16.7% are with retail properties.

Last November, three other Moffett office towers in the complex were refinanced with a $284 million loan following a lease agreement with Amazon, and were part of a CMBS transaction sponsored by Citigroup.

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