Citi Prices Largest Single Bank-Contributed, Multi-Only CMBS Conduit Deal Since GFC – Commercial Observer
Dog days of summer? Not for Citigroup, which just priced a record-setting deal.
The bank this week priced the largest multifamily-only conduit commercial mortgage-backed securities (CMBS) transaction originated by a single bank since the Global Financial Crisis.
The transaction, Citigroup Commercial Mortgage Trust 2026-MFAM1, is an all-multifamily conduit deal comprising 27 five-year, interest-only loans on 27 properties. It has an aggregate principal balance of $816.9 million, and 100 percent of the loans were contributed by Citi Real Estate Funding .
In addition to the deal being the biggest single bank-originated multifamily-only conduit deal since the GFC, according to Trepp data, it also seemingly represents the largest loan contribution in a conduit deal by a single bank post-Covid. In 2016, the GSMS 2016-GS4 transaction was a single bank weighing in at a little over $1.2 billion. Further back, J.P. Morgan was the single mortgage loan seller in two conduit deals it issued in 2011: the $1.5 billion JPMCC 2011-C3 and $1.47 billion JPMCC 2011-C4 transactions.
The Citigroup Commercial Mortgage Trust 2026-MFAM1 AAA bonds priced at swaps plus 80 basis points (bps) earlier this week, 8 bps tighter than the last cash-flow AAA tranche priced on the JPMF1 Multifamily Mortgage Trust 2026-FX1 transaction, which priced in May. In the latter deal, which was also 100 percent multifamily, MF1 Capital was the mortgage seller for 100 percent of the loans, which totaled $734 million.
Sources familiar with the Citi execution said the bank saw a void — and appetite — in the market for medium- to high-leverage loans on high-quality multifamily product, and leaned in. The bank faced some inventory risk with the pool but fully committed to the program, holding terms on every loan’s execution, and everything went swimmingly as a result.
According to Fitch Ratings, the Citi deal’s average Fitch loan-to-value (LTV) of 123.4 percent is higher than five-year multiborrower averages in both 2026 deals so far as well as 2025 deals — weighing it at 102 percent and 101 percent, respectively — as well as the Freddie Mac seven-year K7 series deals rated by the ratings agency between 2023 and 2026, year-to-date, which had an average Fitch LTV of 115.7 percent.
Citi regularly competes with agencies on multifamily loans, but a higher leverage point coupled with interest-only loan structures understandably appeals to borrowers in today’s market. That said, there has been a pickup in interest-only agency CMBS issuance, Stephen Buschbom, Trepp’s head of applied research and analytics, told Commercial Observer.
“The amount of loans that are amortizing in the agency pools has dropped off pretty noticeably over the last couple of years, which, to me, reads very much like a very competitive lending landscape at the moment,” he said.
As for the upside in buying bonds on a private label deal such as Citi’s versus a Freddie Mac K-series deal? “A little bit has to do with structuring, and also a little bit of extra yield pickup,” Buschbom said. “Given that the top 10 loans account for more than 50 percent of collateral, when I look at the risk I’m taking — which is very minimal risk in buying the AAA-minus- or AA-minus-rated bonds— I would feel pretty good about [both the Citi and J.P. Morgan pools], especially if I’m picking up yield relative to an agency CMBS equivalent.”
While the Citi deal comprises all multifamily loans, it’s diverse in terms of the properties’ geographic distribution — spread across core, primary markets with the top three markets being New York, Los Angeles and Florida — and sponsorship.
“If I’m thinking and acting like a bond buyer, I actually like that because I get more loan diversification because it’s a conduit pool with a large number of loans, and I’m diversified across sponsors,” Buschbom said.
He added that single-asset, single-borrower deals make up about three-fourths of all private-label CMBS issuance today, forcing borrowers to take some concentration risk either by borrower or by property type. “With this multifamily conduit deal, it’s giving me more diversification in one go,” he said.
An eternal darling of investment portfolios, multifamily’s crown is seemingly as shiny as ever.
“Multifamily has a strong backstop,” Buschbom added. “We’re structurally undersupplied on housing in the U.S., and so there’s a very strong floor to valuations, assuming you get comfortable with the top 15 loans in these pools.”
So, dog days of summer? Pfft! Not unless you’re talking about this dog.
Cathy Cunningham can be reached at ccunningham@commercialobserver.com
