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Commercial RealEstate Direct

Cantor Fitzgerald Launches Inaugural CMBS Transaction

April 15, 2011

Cantor Fitzgerald has launched its first-ever CMBS transaction, a $634.5 million deal backed by 38 loans it had originated.

The investment bank started developing a commercial mortgage-lending platform in 2009 when it hired a group of former senior executives of Credit Suisse's real estate finance unit. The group is led by Anthony Orso and Steven Kantor. Its originations are funded by CIM Group, which manages a series of funds capitalized by pensions such as California's Public Employees' and Teachers' Retirement systems, as well as the New Jersey Division of Investment.

It originally planned to conduct a transaction in partnership with Wells Fargo Securities. But that plan was eventually scotched and Cantor decided to go solo.

The firm's initial transaction, CFCRE Commercial Mortgage Trust, 2011-C1, is rated by Moody's, Fitch and Realpoint.

It is unlike the five other conduits that have been completed so far this year in that it has only a 27.2 percent concentration of retail loans. The five previous deals have had an average retail concentration of 51.5 percent. In addition, it has a 23.8 percent concentration of apartment loans - by far the most of any private-label conduit this year or last. And it has a 27.1 percent concentration of properties that are leased to the General Services Administration, an arm of the federal government. Most of those properties are owned by affiliates of National Government Properties of McLean, Va.

As a result, the deal's most senior classes have a 17.625 percent subordination level. That means 82.4 percent of its bonds could be packaged with AAA/Aaa ratings. In contrast, the average AAA subordination level for the five conduit deals that preceded it this year was 18.95 percent. But that includes a 22.875 percent outlier, Morgan Stanley Capital I Trust, 2011-C1.

All of the Cantor deal's collateral loans have at least some amortization. None pay only interest for their entire term, but six that amount to 31.2 percent of the deal balance pay interest for some of their term.

The 10 largest loans amount to 57.9 percent of the deal, which has an underwritten weighted average debt-service coverage level of 1.52x and loan-to-value ratio of 67.6 percent.

Midland Loan Services is master servicer, while LNR Partners, which acquired the deal's B-piece, is special servicer.

The expectation is that the transaction will price sometime next week at levels that would be tighter than the last conduit, GS Mortgage Securities Corp., 2011-GC3. That deal saw its 10-year AAA bond class price at a spread of 125 basis points over swaps.

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