A Fitch Ratings pre-sale report is out on the first commercial mortgage-backed security backed by non- and sub-performing assets to come to market in over a decade.
The existence of such a deal reflects a narrowing of the bid-ask spread on distressed commercial mortgage assets to the point where secondary market trade of such assets may be picking up, according to an analyst that rated the deal.
“This is not CMBS-originated collateral, it is bank-originated collateral,” noted Dan Chambers, a managing director in Fitch's CMBS group. He told this publication that the transaction shows that “banks are in a better capital position, so they are more willing to sell these assets on a periodic basis.”
Fitch has assigned an expected rating of BBB-sf to the $132 million transaction, Rialto Capital, Series 2012-LT1, due February 2025. It has a single class and is backed by 271 performing and sub-performing mortgages securing 266 properties, 11 unsecured loans and 38 properties acquired at acquisition or through foreclosure.
More specifically, the collateral includes ownership interests in the special-purpose vehicles holding the mortgages and properties, rights under the mortgage documents, as well as “all accounts, and any and all proceeds and the rights to receive payments thereunder,” according to the presale report.
Among property types in the transaction are commercial and multifamily real estate properties, commercial and residential land, homebuilder inventory, lots, and land, single-family residences, and other assets.
