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Multifamily dominates new CRE CLO collateral with near-universal IO terms
In a sample of CRE CLO deals totaling $4.68 billion, apartment collateral made up 79.8% of balance, with full-term interest-only loans at 95% of the collateral pool.
Commercial Observer, citing analysis from CRED iQ, reports that recent commercial real estate collateralized loan obligation deals are heavily concentrated in multifamily assets and structured with interest-only features.
In the sample of the latest deals totaling $4.68 billion, CRED iQ analyzed 160 loans of collateral, finding apartment collateral at 79.8% of aggregate balance. Hospitality accounted for 8.1%, industrial for 5.2%, while office, retail, and health care each made up roughly 1% or less.
The deals also rely on interest-only structures, with interest-only terms nearly universal. Full-term interest-only loans represented 95% of collateral balance, and the remaining portion carried partial IO or amortization.
Commercial Observer adds that the sampled pools carried a weighted-average spread of 303 basis points over the Secured Oversight Financing Rate and a weighted-average coupon near 6.68%. Geographic exposure skewed toward New York, Florida, and Texas, which together accounted for more than 43% of balance, and future funding commitments totaled $244 million across the deals, keeping refinancing pressure front and center for investors.