- What A $550.3m conduit issue is being marketed to investors
- Why The deal comprises loans on industrial, retail, hotel, multifamily and office properties
- What’s next The offering is slated to price in the coming week
Canada’s first conduit CMBS offering in more than a year is making the rounds with investors.
RBC Capital Markets is the structuring agent, with bookrunning assists from BMO Capital, Casgrain & Co., CIBC, Laurentian Bank and National Bank Financial. All the loans were contributed by CMLS Financial. The deal is expected to price next week.
The $550.3m deal, off the Canadian Commercial Mortgage Origination Trust shelf, encompasses 28 loans on 39 properties. By sector, the issue comprises loans on industrial (46%), retail (27.4%), hotel (17.2%), multifamily (5%) and office (4.4%) properties.
The average loan is $19.7m, and the weighted average remaining term is 53 months with an average of 21 months seasoning. The appraised loan-to-value ratio by net cashflow is 49.7%, and the weighted average debt-service coverage ratio is 1.55 to 1.
Only the class A notes are being offered (CCMO 2024-6). The $424.5m super-senior tranche is rated AAA by Morningstar DBRS and has a weighted average life of 3.02 years.
The last CMBS issue in Canada, off the same shelf, priced in December 2022. That $494.5m deal, CCMO 2022-5, comprised 35 loans on 52 properties. Its $75m super-senior tranche priced at 200 bps over the yield on Government of Canada bonds.
In the current offering, the largest concentration comprises five cross-collateralized and cross-defaulted mortgages on five full- and extended-service hotels totaling $94.6m of the trust balance, or 17.2% of the pool.
The borrower is Vancouver-based SilverBirch Hotels & Resorts, which owns 17 hotels across Canada. Including portions that were not securitized, the loans total $158.5m, which refinanced $133m of existing debt and returned $25.5m of equity.
The collateral properties are the 201-room Residence Inn Vancouver Downtown, the 410-room Delta Hotels Ottawa City Centre, the 238-room DoubleTree by Hilton West Edmonton, the 127-room Home2 Suites by Hilton West Edmonton and the 225-room Delta Hotels Bessborough, in Saskatoon.
The hotels’ weighted average occupancy was 77.7% at yearend, though the individual occupancies ranged from 47.1% to 89%.
The second largest concentration, at $51.9m, or 9.4% of the pool, stems from a loan on a portfolio of four industrial properties and one mixed-use property in three Montreal submarkets. Olymbec, a Montreal-based real estate firm owned and operated by brothers Derek Stern and Richard Stern, is the borrower.
The properties were 96% occupied as of January by 18 tenants. The largest is Pantos Logistics Canada, which leases 198,000 sq ft, or 23.1% of the portfolio’s total space. By leased area, the next three are: Enterprise Rent A Car Canada (19.3%), Les Entreprises Getpaq (19.1%) and Armstrong World Industries Canada (8.9%).
A loan on grocery-anchored retail centre Brighton Marketplace in Saskatoon is the third largest in the conduit deal. It represents $51.7m of the trust balance, or 9.4% of the pool. Dream Asset Management and Wilson’s Retail own the property in a 50/50 joint venture.
Anchored by Save On Foods, the center was built between 2018 and 2023. One free-standing pad will be completed this year, bringing the total square footage to 200,000. Tenants include Landmark Cinemas, Motion Fitness, Dollarama and the Key Steakhouse.
Don’t miss out on the biggest stories from Canada – act now
During this launch period, Green Street News Canada is free to view. To continue reading articles after this period ends on July 8, click the button to inquire about a subscription, or adding Canada to your existing Green Street News subscription.