Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of Bancorp 2019-CRE5, a $518.3 million static commercial real estate collateralized loan obligation (CRE CLO) securitization. The transaction is structured as a REMIC trust, and unlike to other CRE CLOs rated by KBRA, it does not permit any ramp-up or acquisition/reinvestment of assets post-closing. In addition, the subject transaction differs from the other KBRA rated CRE CLOs because the sponsor does not retain the first-loss position; here, the first-loss position will be sold to a third party.
The transaction will be collateralized by 61 CRE whole loans (or participations therein) with a cut-off date principal balance of $518.3 million. All of the initial mortgage assets are floating rate loans indexed to one-month LIBOR. The loans are secured by the fee simple interest in 75 properties. The pools property types include multifamily (82.4%), office (5.8%), lodging (5.4%), retail (5.2%), and mixed use (1.2%).
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, 28.3% and 43.5% lower than the appraisers as-is values and stabilized values, respectively, and a KBRA Loan to Value (KLTV) of 117.9%. 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 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, Bancorp 2019-CRE5 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: Bancorp 2019-CRE5
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|Class||Initial Note Balance||Expected KBRA Rating|
¹A third party purchaser, BIG CRE5, LLC, is expected to purchase the Class H-RR certificates which are intended to constitute an “eligible horizontal residual interest for purposes of the US risk retention rules. ²The exact initial certificate balances of the Class G and H-RR certificates are subject to change based on final pricing.
To access ratings, reports and disclosures, click here.
Related Publications: (available at www.kbra.com)
- CMBS: Bancorp 2019-CRE5 Pre-Sale Report
- U.S. CMBS Multi-Borrower Rating Methodology
- U.S. CMBS Property Evaluation Methodology
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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.
Erika Hinman, Associate Director
Yee Cent Wong, Senior Managing Director
Nitin Bhasin, Senior Managing Director
Susannah Keagle, Senior Director