Kroll Bond Rating Agency Assigns Final Ratings to GSMS 2012-TMSQ

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigned its final ratings to GSMS 2012-TMSQ, a large loan transaction collateralized by a $208 million first lien mortgage loan. Concurrently, we have withdrawn our preliminary ratings on the certificates, which were assigned on December 5, 2012 (see our ratings listed below).

The loan is secured by the borrowers’ fee simple interest in a 93,263 sf, 23 story retail and signage building at 1471 Broadway in the Times Square section of New York. The area attracts over 35 million visitors on a yearly basis, making the area highly desirable for advertisers, and the property is one of the most prominent buildings in the world in terms of large neon and vinyl advertising signage. Approximately 85% of the property’s base rental income is derived from 18 LED and vinyl signs affixed to the exterior of the building. Three floors of the building, which are comprised of approximately 13,989 sf, are also used by Walgreens for retail selling space. The property is also the home of the annual ball drop on New Year’s Eve.

KBRA’s analysis of the transaction incorporated our single borrower & large loan rating process that begins with our analysts' evaluation of underlying collateral properties' financial and operating performance using our CMBS Property Evaluation Guidelines, which determine KBRA’s estimate of sustainable net cash flow (KNCF) and KBRA value. The results of our analysis yielded a KBRA Net Cash flow (KNCF) of $23.1 million and a KBRA value of $307.5 million. Our resulting KBRA Loan to Value (KLTV) was 67.6%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental and appraisal reports, our own on-site inspection of the property and its competitive set, as well as legal documentation and opinions.

Final Ratings Assigned: GSMS 2012-TMSQ

Class   Expected Rating   Balance (US$)
A   AAA (sf)   $138,692,000
X-A   AAA (sf)   $138,692,000*
X-B   AAA (sf)   $30,417,000*
B   AA+ (sf)   $30,417,000
C   A (sf)   $23,519,000
D   BBB+ (sf)   $15,372,000

Related publications (available at www.krollbondratings.com):

CMBS Presale Report: GSMS 2012-TMSQ
CMBS: GSMS 2012-TMSQ 17-g7 Disclosure Report
CMBS: U.S. CMBS Multi-Borrower Rating Methodology, published February 23, 2012
CMBS Property Evaluation Guidelines, published June 10, 2011


About Kroll Bond Rating Agency

Kroll Bond Rating Agency, Inc. (www.krollbondratings.com) is registered with the SEC as a nationally recognized statistical rating organization (NRSRO). Kroll Bond Rating Agency was established in 2010 to restore trust in credit ratings by establishing new standards for assessing risk and by offering accurate, clear, and transparent ratings.

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Michael Brown, 646-731-2307
mbbrown@krollbondratings.com
or
Monika Joshi, 646-731-2360
mjoshi@krollbondratings.com
or
Keith Kockenmeister, 646-731-2349
kkockenmeister@krollbondratings.com
or
Robin Regan, 646-731-2339
rregan@krollbondratings.com

Sharing

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Michael Brown, 646-731-2307
mbbrown@krollbondratings.com
or
Monika Joshi, 646-731-2360
mjoshi@krollbondratings.com
or
Keith Kockenmeister, 646-731-2349
kkockenmeister@krollbondratings.com
or
Robin Regan, 646-731-2339
rregan@krollbondratings.com