Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of GPMT 2019-FL2, an $825.0 million managed commercial real estate collateralized loan obligation (CRE CLO) securitization, with a 24-month reinvestment period. GPMT Collateral Manager LLC, an affiliate of Granite Point Mortgage Trust Inc., will serve as the transactions collateral manager.
The transaction will be fully ramped at closing and will initially be collateralized by 28 CRE whole loans (or senior participations therein) with an aggregate cut-off date balance of $825.0 million. Previously unidentified whole loans and participations may be acquired during the reinvestment periods, subject to eligibility and reinvestment criteria. The eligibility criteria includes, among other things, maximum stabilized LTV and minimum stabilized DSC requirements; pool level concentration limits for loan size, property type, and geographic location; certain restrictions on participation interests and future funding assets; and that the rating condition must be satisfied with respect to KBRA.
The transaction also includes interest coverage (IC) and overcollateralization (OC) cash diversion tests which, in addition to structural subordination, provide credit enhancement to the rated notes. Should either of the tests not be satisfied, interest proceeds remaining after payment of Class D interest would be diverted to pay down the senior notes in a sequential manner.
All of the initial mortgage assets are floating rate loans indexed to one-month LIBOR. The loans are secured by the fee and leasehold interests in 28 properties. The initial pools property types include office (38.7% of the pool balance), multifamily (27.4%), lodging (10.6%), mixed-use (10.6%), industrial (9.3%), manufactured housing (2.3%) and retail (2.0%). The eligibility criteria also permit the acquisition of multifamily (including student housing), industrial, office, retail, self-storage, lodging, and mixed-use.
KBRAs analysis of the transaction involved evaluation of property cash flows and values within initial loan pool using our U.S. CMBS Property Evaluation Methodology. The results of the analysis yielded KBRA values that were, on a weighted average basis, 32.2% and 47.1% lower than the appraisers as-is values and stabilized values, respectively, and a KBRA Loan to Value (KLTV) for the initial loan pool of 124.3%. The results of this analysis were utilized in the application of our U.S. CMBS Multi-Borrower Rating Methodology. The analysis also included quantitative and/or qualitative review of the various structural features of the transaction, including reinvestment and IC & OC tests, as well as a review of the legal documents, the results of which were incorporated into our ratings assignment process.
For complete details on the analysis, please see our pre-sale report, GPMT 2019-FL2, published at www.kbra.com. 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 ratings that differ from the preliminary ratings.
Preliminary Ratings Assigned: GPMT 2019-FL2
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To access ratings, reports and disclosures, click here.
Related Publications: (available at www.kbra.com)
- GPMT 2019-FL2 Pre-Sale Report
- GPMT 2019-FL2 KBRA CRE CLO KCAT
- U.S. CMBS Multi-Borrower Rating Methodology
- U.S. CMBS Property Evaluation Methodology
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 Brown, Senior Director