Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of TRTX 2018-FL2, a $1.0 billion managed commercial real estate collateralized loan obligation (CRE CLO) securitization. The transaction will initially be collateralized by 23 pari passu interests in mortgage loans and two whole loans, which are secured by 122 properties. The collateral consists of both non-controlling interests (22 loans, 87.3%) and controlling interests (3, 12.7%) in the related mortgage loans.
The subject transaction includes a 24-month reinvestment period during which previously unidentified whole loans and senior participations can be acquired using principal proceeds received from the mortgage assets. In all cases, each reinvestment asset must satisfy the eligibility criteria and the 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.
KBRAs analysis of the transaction involved a detailed evaluation of the underlying cash flows using our U.S. CMBS Property Evaluation Methodology and the application of our U.S. CMBS Multi-Borrower Rating Methodology. The analysis resulted in KBRAs values to be, on average, 41.4% and 50.8% lower than the appraisers as-is values and stabilized values, respectively. The resulting in-trust KBRA Loan to Value (KLTV), assuming that all the future funding commitments are fully funded, was 126.9%. We also conducted scenario analyses to evaluate and incorporate the impact of the transactions various structural features in our ratings assignment process.
For complete details on the analysis, please see our pre-sale report, TRTX 2018-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: TRTX 2018-FL2
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To access ratings, reports and disclosures, click here.
Related Publications: (available at www.kbra.com)
- CMBS: TRTX 2018-FL2 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.
Aaron Reed, Director
Brown, Senior Director
Bhasin, Senior Managing Director
Carley, Senior Director