IFR: Goldman Sachs Preps $1 billion CMBS

* So-called B note already sold to third-party investors

* First of many CMBS transactions planned for 2011

* But CMBS delinquencies hits all-time high of 9.2pct

By Adam Tempkin

NEW YORK, Jan 6 (IFR) – Goldman Sachs’ (GS.N: ) mortgage
securities division filed a preliminary S-3 and prospectus
supplement with the SEC for an upcoming fixed-rate CMBS in the
US$1bn range on Tuesday.

The deal will have a so-called pari-passu split-loan
structure and will likely hit the market in the first quarter.

Goldman Sachs Commercial Mortgage Capital is the originator
and Goldman Sachs Mortgage Company is the sponsor.

The deal will be backed by retail, office, multifamily,
hospitality, and auto dealership properties.

The split loan structure means that there is a B note not
included in the trust that was sold to third-party investors,
and the note is pari passu in right of payment with the senior
part of the loan.

After the occurrence of certain defaults, the B note loans
may be subordinate in right of payment.

Goldman Sachs originated US$1.6bn fixed-rate
commercial-mortgage loans in 2010, and securitized approximately
US$1.1bn of them. The bank originated US$440m fixed-rate loans
in 2009, and securitized US$400m of them that year.

Goldman last issued CMBS in mid-December with its $876.451m
GSMS 2010-C2 transaction. Citibank was co-bookrunner on the
deal, which was backed 38.8 pct by retail properties, 33.8 pct
by office properties, and the rest a mixture of hotel,
mixed-use, multifamily, industrial, ground leased land, and
mobile-home park properties.

The transaction was co-managed by CastleOak Securities LP,
RBS, and Wells Fargo, and priced on December 16.

The two ‘AAA’ tranches of the GSMS 2010-C2 transaction
widened out slightly from price talk, but the ‘AA’, ‘A’, and
‘BBB-‘ pieces all priced tightly.

The CMBS offering will be one of many upcoming issues as the
US CMBS market gains steam in 2011. The approximate US$13.5bn in
2010 CMBS issuance is expected to triple in 2011 as CMBS lending
returns and becomes more competitive versus lending from
life-insurance companies.

The majority of investment banks have been collecting loans
in their conduits over the last year and are expected to tap the
market in the first half of 2011.

Deutsche Bank and UBS are currently prepping a $2.5bn issue
for February while JP Morgan expects to launch a $1.5bn

Despite the positive signals in the CMBS market, including
an uptick in sales of trophy properties and the resolution of
many troubled CMBS loans, the delinquency rate for CMBS loans
hit an all-time high this week of 9.2 pct, according to Trepp.

However, the relatively robust pipeline of new deals —
which theoretically should have low delinquencies for a while —
will continue to put downward pressure on the delinquency rate,
Trepp said.

[email protected]

IFR: Goldman Sachs Preps $1 billion CMBS