Bridge REIT LLC is sponsoring a $449.6 million bridge-loan securitization backed mostly by transitional multifamily properties.
According to a presale report from DBRS Morningstar, the BDS 2020-FL5 transaction is a two-year reinvestable portfolio of 24 commercial loans secured by 26 real estate properties, with balances totaling $492.2 million. The proceeds raised from the note sale will be used in part to acquire an additional $57.8 million in ramp-up loans by the sponsor, bringing the targeted collateral size of the pool to $550 million.
DBRS Morningstar has assigned preliminary AAA ratings to the $314.88 million Class A notes in the deal, which is being structured by Wells Fargo. Wells is also the lead placement agent alongside Barclays and JPMorgan.
DBRS Morningstar reports that 77% of the portfolio properties are multifamily apartment properties, which also includes the largest loan in the portfolio: a $43.96 million loan for Cobalt Springs, an apartment complex in Taylors, S.C.
The pool also includes a concentration of office properties (11.9% of the collateral balance) and hospitality properties (7.7%).
While many of the properties are undergoing renovations, they are still generating cash flows. Cobalt Springs, for example, is more than 93% occupied as certain units are being upgraded and remodeled.
The transaction is the first publicly rated commercial mortgage-backed securitization of the year. Last year, banks arranged approximately $41.3 billion in conduit CMBS market transactions across 50 rated deals, according to Finsight.
Late Tuesday, Moody’s Investors Service issued a provisional AAA rating on the Class A notes. (Moody’s classified the transaction as a commercial real estate CLO.)
