KBRA Assigns Preliminary Ratings to CALI 2019-101C


Kroll Bond Rating Agency (KBRA) announces the assignment of preliminary ratings to nine classes of CALI 2019-101C, a CMBS single-borrower securitization.

The collateral for the transaction is a $515.0 million portion of a $755.0 million non-recourse, first lien mortgage loan. The fixed rate loan has a ten-year term and requires monthly interest-only payments. The loan is secured by the borrowers fee simple interest in 101 California, a 1.3 million sf, 48-story, Class-A office building located in the financial district of the San Francisco CBD. The building is LEED Platinum certified and features panoramic views from its upper floors, a seven-story glass enclosed atrium style lobby, a granite plaza with flower beds and a fountain, and a subterranean garage containing 210 parking spaces.

As of December 2018, the property was 91.5% leased to approximately 67 tenants. The five largest tenants are either financial institutions or large law firms, and include Merrill Lynch, Cooley LLP, Morgan Stanley, Deutsche Bank and Winston & Strawn. Together, these five tenants account for 35.0% of the total sf and 31.9% of total base rent.

KBRAs analysis of the transaction included a detailed evaluation of the properties cash flows using our U.S. CMBS Property Evaluation Methodology and the application of our U.S. CMBS Single Borrower & Large Loan Rating Methodology. The results of our analysis yielded a KBRA net cash flow (KNCF) of $59.6 million. To value the property, we applied a capitalization rate of 7.00% to arrive at a KBRA value of $850.9 million. The resulting KBRA Loan to Value (KLTV) is 88.7%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental, and appraisal reports; the results of our site inspection of the property, and legal documentation review.

For further details on KBRAs analysis, please see our pre-sale report, CALI 2019-101C, published at www.kbra.com. To access ratings, reports and disclosures, click here.

The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: CALI 2019-101C

Class   Initial Class Balance   Expected KBRA Rating
A   $196,238,000   AAA (sf)
X-A   $272,551,0001   AAA (sf)
X-B   $212,229,0001   BB- (sf)
B   $43,611,000   AA+ (sf)
C   $32,702,000   A+ (sf)
D   $61,589,000   BBB+ (sf)
E   $100,100,000   BB+ (sf)
F   $50,540,000   BB- (sf)
HRR2   $30,220,000   BB- (sf)

1Notional balance. 2In satisfaction of the U.S. risk retention rules, CPPIB Credit Structured North America III. Inc. will purchase and retain an eligible horizontal residual interest consisting of the Class HRR certificates, representing at least 5.0% of the fair market value of all non-residual certificates issued.

Related Publications: (available at www.kbra.com)


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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Michael McGorty,
(646) 731-2393
[email protected]

Michael Brown, Managing Director
(646) 731-2307
[email protected]

Susannah Keagle, Senior Director
(646) 731-3357
[email protected]