Benchmark 2023-B39 Mortgage Trust Annual Report - How They Did This Year

This guide explains how the Benchmark 2023-B39 Mortgage Trust performed this year. Think of this as a cheat sheet to help you decide if this investment fits your goals, without the confusing financial jargon.

1. What does this company do?

Think of this Trust as a pool of commercial real estate loans. Instead of one bank holding a massive loan for a mall or office building, they bundle these loans together and sell pieces to investors. You earn money as property owners pay back their interest and principal.

The Trust launched in 2023 with about $1.15 billion in loans. It is backed by 48 high-profile properties, including:

• Fashion Valley Mall (San Diego, CA): $108.1 million (9.4% of the pool).
• Pacific Design Center (West Hollywood, CA): $81.7 million (7.1% of the pool).
• Scottsdale Fashion Square (Scottsdale, AZ): $51.8 million (4.5% of the pool).
• One & Two Commerce Square (Philadelphia, PA): $50.6 million (4.4% of the pool).

2. Financial performance & health

This is a "pass-through" investment, so it does not grow like a tech company. Its job is to collect payments from properties and pass them to you.

The average interest rate on these loans is 6.24%. The Trust is performing as expected, with 100% of loans currently paid up. No single borrower is in financial trouble, which keeps the Trust stable. The investment relies entirely on the properties themselves and their rental income.

3. Major wins and challenges

The Trust operates through a complex structure where management is split across many different companies. For example, the Pacific Design Center and Scottsdale Fashion Square follow different rules and use different management teams. You rely on a large group of servicers, such as Wells Fargo and Midland Loan Services, to manage the portfolio correctly.

4. Key risks

The primary risk is concentration. The top 10 loans make up about 45% of the total pool. If one of these malls or office buildings struggles—perhaps because a major tenant leaves—it could significantly impact your payments.

Additionally, as a "non-accelerated filer," the Trust provides reporting on a different schedule than large public companies. You rely on the ongoing health of the property owners, as the Trust does not provide frequent updates on the daily operations of every individual property.

5. Future outlook

The Trust is in a maintenance phase. There are no new business lines or strategic shifts; the focus is simply collecting payments and distributing them to you. Your outlook depends on the health of the commercial real estate market, which has been influenced by interest rates and changing office occupancy trends.

Note: This guide is for informational purposes and is not financial advice. Before investing, consider whether the stability of a loan-based pool aligns with your personal risk tolerance and income goals.