Kroll Bond Rating Agency Assigns Preliminary Ratings to MSC 2013-ALTM

NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings for the MSC 2013-ALTM transaction (see ratings list below). MSC 2013-ALTM is a $160.0 million CMBS large loan transaction.

The collateral for the securitization is a single, non-recourse, first lien mortgage loan that is secured by the borrower’s fee simple and leasehold interests in 636,566 square feet (sf) of Altamonte Mall. The property, including the non-collateral anchor tenants, is a 1.16 million sf two-level super-regional mall located in Altamonte Springs, Florida. The center sits on an 82.58-acre parcel located on the north side of Altamonte Drive (SR 436).The property is anchored by Dillard’s, JC Penney, Macy’s and Sears. JC Penney serves as collateral for the loan, and the remaining anchors own their own stores, including the underlying land, and operate them pursuant to reciprocal easement agreement (REA) with the borrower. In addition to the anchors, the mall has 125 tenants, which are predominately comprised of national retailers. The borrower is a single purpose entity that is indirectly owned by a joint venture between General Growth Properties, Inc. (GGP), and New York State Common Retirement Fund (NYSCRF). GGP is a fully-integrated, self-managed and self-administered real estate investment trust (REIT) focused on owning, managing, leasing and redeveloping regional malls throughout the United States. The property is currently managed by General Growth Services, Inc. (“GGSI”), an affiliate of GGP. As of January 2013, the subject collateral l was 96.9% occupied while overall occupancy at the mall was 98.3%. For the TTM period ending December 2012, comparable in-line stores generated average sales of $590 per sf. The resulting occupancy cost for the in-line tenancy is 10.6%.

KBRA’s analysis of the transaction included a detailed evaluation of the property’s cash flow using our CMBS Property Evaluation Guidelines, and the application of our CMBS Single Borrower and Large Loan Rating Methodology. The results of our analysis yielded a KBRA Net Cash flow (KNCF) of $15.3 million. KNCF does not include two leases out for signature which will increase the collateral occupancy to 98.1% and base rent by $705,826. To value the property, we applied a 7.75% capitalization rate to arrive at a value of $197.9 million. Our resulting KBRA Loan to Value (KLTV) was 80.9%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental and appraisal reports, our own on-site inspections of the properties and the competition and legal documentation and opinions.

For complete details on the analysis, please see our Pre-Sale Report, entitled MSC 2013-ALTM, which was 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: MSC 2013-ALTM
Class	Expected Rating	Balance (US$)
A1	AAA (sf)	$22,500,000
A2	AAA (sf)	$74,400,000
X-A	AAA (sf)	$96,900,000*
X-B	AAA (sf)	$21,000,000*
B	AA- (sf)	$21,000,000
C	A- (sf)	$15,700,000
D	BBB- (sf)	$19,300,000
E	BB+ (sf)	$7,100,000

*Notional Amount

17g-7 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 MSC 2013-ALTM 17g-7 Disclosure Report.

Related publications:

CMBS Property Evaluation Guidelines, published June 10, 2011

CMBS Single Borrower & Large Loan Rating Methodology, published August 8, 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.