Sector developments and company hires

‘Unique’ CLN deal readied
JPMorgan Chase Bank (JPMCB) is prepping the debut CLN issuance from the JPMorgan Wealth Management Mortgage (JPMWM) platform to transfer credit risk to noteholders through a hypothetical tranched CDS on a reference pool of mortgages. Dubbed JP Morgan Wealth Management Reference Notes Series 2021-CL1, principal payments on the notes are based on the performance of a US$2.36bn reference pool consisting of 2,471 fully amortising fixed-rate prime jumbo non-conforming mortgages, with original terms to maturity of 30 years.

The notes are uncapped SOFR floaters and are unsecured obligations of JPMCB. Unlike principal payment, interest payment to the notes is not dependent on the performance of the reference pool, except for loss mitigation modification.

The deal is believed to be unique in that the source of payments for the notes will be JPMCB's own funds and not the collections on the loans or note proceeds held in a segregated trust account. As a result, Moody’s capped its ratings on the notes at JPMCB's senior unsecured rating of Aa2.

The agency has assigned provisional ratings to five tranches, ranging from Aa3 to B1.

In other news…

Acquisition
Nuveen is set to acquire Greenworks Lending, a C-PACE financing provider. The acquisition gives Nuveen a foothold in the clean energy and energy efficiency lending market and will provide its clients with access to an innovative and attractive clean energy investment. 

Founded and led by Jessica Bailey and Alexandra Cooley, Greenworks' mission is aligned with one of the key tenets of Nuveen's responsible investing platform: reducing the carbon footprint of commercial real estate. The transaction is expected to close during 1H21, subject to regulatory approval.

CMBS ratings action filed
The US SEC has filed a civil action alleging that Morningstar Credit Ratings violated disclosure and internal controls provisions of the federal securities laws in rating CMBS. According to the complaint, in 30 CMBS transactions totaling US$30bn that Morningstar rated from 2015 to 2016, the credit rating agency permitted analysts to make undisclosed adjustments to key stresses in the model that it used in determining the rating for that transaction. The complaint also alleges that Morningstar failed to establish and enforce an effective internal control structure governing the adjustments for a total of 31 transactions.

According to the complaint, analysts frequently made these undisclosed adjustments to reduce the stress applied in the model and, by easing the stresses, Morningstar lowered the credit enhancement it required for many of the ratings it awarded classes of the CMBS transactions. This, the complaint alleges, in certain instances benefited the issuers that paid for the ratings because it enabled those issuers to pay investors less interest than they would have without the adjustments.

The SEC’s complaint, filed in federal district court in the Southern District of New York, charges Morningstar with violating disclosure and internal control provisions of the Securities Exchange Act of 1934 and seeks injunctive relief, disgorgement with prejudgment interest and civil penalties.

EMEA
NPL Markets has strengthened its advisory board and management team, as the company embraces new opportunities in the burgeoning illiquid and distressed loan market. The newly appointed senior advisors will complement the existing advisory board by bringing additional in-depth expertise on data, technology and financial markets, as well as relationships with senior decisionmakers with leading banks and institutional investors.

Richard Prager joins as a member of the advisory board, having formerly been global head of the trading, liquidity and investment platform at BlackRock and a member of its global executive committee. Joining as senior advisors are: Joachim Sonne (formerly co-head of the EMEA TMT investment banking group at JPMorgan); Nedelcho Nedelchev (formerly ceo at Fibank and member of the supervisory board); Ian Tyler (currently also senior advisor at Alvarez and Marsal); and Carlos Lopez Jall (formerly co-founder and head of corporate finance at BEKA Finance).

Finally, Rodolfo Diotallevi - who was previously a member of NPL Markets’ advisory board - joins the management team as chief business officer.

North America
Jeff Pirhalla has joined Greystone as a director for the firm’s agency lending platform, focusing on bank correspondent and lending relationships intended to drive volume for Greystone’s small loans and overall agency lending platforms. Based in Atlanta and Charlotte, Pirhalla reports to Rick Wolf, head of Greystone’s small loan and East Coast agency lending platform.

Pirhalla comes to Greystone after five years at CBRE, where he founded the wholesale and bank correspondent lending divisions. Previously, he worked at Sabal Financial, Wells Fargo, Impac Commercial Capital Corp, SunTrust Banks and JPMorgan.

Sabal Capital Partners has added 14 new hires to support its strategic growth as a provider of a comprehensive range of multifamily and commercial real estate debt solutions. The new team members span the firm’s agency and non-agency programmes, as well as its CMBS programme. 

In particular, Owen Bouton and Michael Cozza – based in Atlanta and New Jersey respectively - have been hired as mds of Sabal’s CMBS group, which provides non-recourse loans up to US$50m on commercial real estate properties nationwide. With more than 15 years of experience, Bouton is a skilled CRE loan originator and most recently served as an executive director of loan production at CIBC, where he headed southeastern balance sheet and CMBS origination efforts for floating and fixed rate loans totalling US$100m. He has also worked at Hunt Mortgage Group and LStar Capital.  

With more than 25 years of experience, Cozza previously served as executive director and senior loan originator at CIBC World Markets, where he generated more than US$19m in revenue across all property types and closed approximately US$1.1bn in fixed and floating rate CRE loans. Before that, he worked at Northfield Bank and JPMorgan.

On the agency lending side, Christopher West joins Sabal as production manager of term lending sales, where he originates loans through Freddie Mac and Fannie Mae. With 10 years of experience, West previously served at Greystone Servicing Co, Basis Investment Group, Walker & Dunlop and CBRE. He is based in Atlanta. 

SFR debut for Starwood
Starwood Capital is in the market with its first single-family rental securitisation. Dubbed STAR 2021-SFR1 Trust, the US$312.5m transaction is backed by a single loan secured by 1,612 SFR properties, consisting of 1,586 single housing units and 26 2-4 housing units.

The properties were acquired by affiliates of the sponsor between November 2018 and October 2020. The pool has properties located in eight MSAs across five states, with about 80.8% of the pool by count in the top three MSAs and approximately 57.4% in Atlanta.

Moody’s has assigned provisional Aaa ratings to the deal’s class A notes and Aa3 ratings to the class B notes.