Kroll Bond Rating Agency Assigns Preliminary Ratings to JPMCC 2013-C10

NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings for the JPMCC 2013-C10 transaction (see ratings list below). JPMCC 2013-C10 is a $1.28 billion CMBS conduit transaction collateralized by 50 fixed rate commercial mortgage loans that are secured by 101 properties.

The loans have principal balances that range from $3.0 million to $130.0 million for the largest loan in the pool, which is secured by The Shops at Riverside (10.2%), a 771,233 square foot regional mall, of which 473,549 square serves as loan collateral. The property is located in Hackensack, New Jersey. The top five loans, which also include Gateway Center (8.8%), EIP Industrial Portfolio (7.1%), 111 West Jackson (6.3%) and Pots-Nets MHC Portfolio (4.8%), represent 37.0% of the initial pool balance, while the top 10 loans represent 52.5%. The properties are geographically diverse and located across 28 states with the three largest state concentrations being New Jersey (14.0%), Illinois (11.6%) and Pennsylvania (11.4%). The pool has exposure to two property types with concentrations in excess of 10%: retail (35.2%) and office (33.9%).

KBRA’s analysis of the transaction incorporated our multi-borrower rating process that begins with our analysts' evaluation of underlying collateral properties' financial and operating performance, which determine KBRA’s estimate of sustainable net cash flow (KNCF) and KBRA value. The analysis incorporates a detailed evaluation of underlying collateral properties’ financial and operating performance using our CMBS Property Evaluation Guidelines to determine Kroll Net Cash Flow (KNCF), which is a key input used in our credit modeling process. On an aggregate basis, KNCF was 3.3% less than the issuer cash flow. KBRA capitalization rates were applied to each asset’s NCF to derive values that were, on an aggregate basis, 33.4% less than third party appraisal values. The pool has an in-trust KLTV of 97.8% and an all-in KLTV of 101.5%. The model deploys rent and occupancy stresses, probability of default regressions, and loss given default calculations to determine losses for each collateral loan, which are then used to assign our credit ratings.

The KBRA credit model deploys rent and occupancy stresses, probability of default regressions, and loss given default calculations to determine losses for each collateral loan, which are then used to assign our credit ratings.

For complete details on the analysis, please see our presale report, JPMCC 2013-C10 published today at www.krollbondratings.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 final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: JPMCC 2013-C10
Class	Expected Ratings	Balance ($)
A-1	AAA(sf)	$63,440,000
A-2	AAA(sf)	$87,164,000
A-3	AAA(sf)	$22,445,000
A-4	AAA(sf)	$185,000,000
A-5	AAA(sf)	$430,080,000
A-SB	AAA(sf)	$106,694,000
X-A*	AAA(sf)	$1,001,882,000
X-B*	AAA(sf)	$276,436,391
A-S	AAA(sf)	$107,059,000
B	AA-(sf)	$84,689,000
C	A-(sf)	$55,926,000
D	BBB-(sf)	$47,937,000
E	BB(sf)	$30,360,000
F	B(sf)	$12,783,000

^* Notional class

17g7 Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled CMBS: JPMCC 2013-C10 17g-7 Disclosure Report.

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

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 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.