Securitization

The deal also provides a sequential principal distribution to all of the certificates at all times, unlike recent non-prime securitizations.

However, capacity issues, the suspension of the government-sponsored enterprise purchase caps and higher conforming limits all could affect activity, KBRA said.

The sponsors got the portfolio through multiple acquisitions from May through October.

The loan pool’s volatility score is high but its diversity of properties is a plus.

Delinquencies fell in nearly every commercial-loan category, at trend anticipated to continue.

Stronger collateral and less credit enhancement reflect lessening pandemic risk.

Benchmark will issue 21 classes of certificates, with 13 entitled to principal and interest payments. Six classes will receive interest only.

The enormous issuance is backed by a single loan secured by first-priority mortgages on a pool of about 6,148 single-family rental homes, and 299 townhouses.

The firm, dubbed Polpo Capital, is looking to produce a 15% net return to investors with modest leverage by capitalizing on the coming distress in commercial mortgage debt as forbearance agreements expire

The bonanza from Wall Street operations is a source of relief for banks struggling to earn more from traditional lending operations, which have suffered from lukewarm demand and a prolonged period of low interest rates.