COLT 2024-INV4 Mortgage Trust is preparing to issue $217.6 million in mortgage backed-securities (MBS) with repayments coming from a pool of mortgages on a range of residential property types.
The underlying mortgages are non-agency, business-purpose investor loans underwritten through investor debt service coverage ratio approaches, according to ratings analysts at S&P Global Ratings and Kroll Bond Rating Agency. In some cases, the mortgages lack borrower debt-to-income underwriting, a borrower might have too many mortgages’ properties or the borrower is not an individual, but an LLC. Those are some of the circumstances that might block credit from the government-sponsored enterprises, according to KBRA.
Single-family residential properties, planned-unit developments, condominiums and townhouses are among the property types that the loans are financing.
LSRMF3 Acquisitions Investments is sponsoring the deal, slated to close on November 21, will issue notes through seven tranches of class A, M and B notes, according to the rating agencies. The notes benefit from credit enhancement levels of 30.45%, 24.3%, 13.8%, 8.65%, 5.00% and 2.05% on the A1, A2, A3, M1, B1, B2 and B3 tranches, respectively. All the notes are fixed rate.
Credit enhancement is composed of a senior-subordinate repayment structure, which shuts the mezzanine and subordinate classes out of principal payments, unless one of those tranches happens to be the most senior class outstanding, according to S&P.
COLT 2024-INV4 also uses a hybrid pro-rata, senior-subordinate repayment structure, where the principal starts of being repaid to the senior classes, S&P said.
Based on available data, yields on the notes could range from 5.50% on the A1 tranche to 7.45% on the B1 notes, according to Asset Securitization Report’s deal database, and they are benchmarked against the three-month I-curve. As for maturities, the senior, class A notes have an average life of 2.43 years, while the M1 and the B1 tranches have an average life of 4.01 years, according to the deal database.
S&P assigns AAA, AA and A to the A1, A2 and A3 notes; BBB to the M1 notes; BB to the B1 notes; and B to the B2 notes. KBRA assigns AAA to the A1 notes; AA+ to the A2 notes; A+ to the A3 notes; BBB+ to the M1 notes; BBB- to the B1 notes; and B+ to the B2 notes.
