Kroll Bond Rating Agency Assigns Preliminary Ratings to JPMCC 2014-DSTY

NEW YORK--()--Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of JPMCC 2014-DSTY, a $430.0 million CMBS large loan fixed-rate transaction (see ratings list below). The transaction collateral consists of two, non-recourse fixed rate, interest only mortgage loans originated by JPMorgan Chase Bank, National Association.

The loans, which are not cross-collateralized or cross defaulted, are each secured by a distinct phase of Destiny USA, a super-regional mall located in Syracuse, New York. The first of the two loans has a balance of $300.0 million and is secured by a mortgage on approximately 1.2 million of the 1.5 million sf that comprises “Phase I” of the project. The second mortgage loan has a balance of $130.0 million and is secured by a mortgage on an 874,200 sf expansion parcel that was completed in 2012 which comprises “Phase II” of the property. Destiny USA has five traditional mall anchor tenants totaling 600,000 sf. These anchors are Macy’s, JCPenney, Lord & Taylor, Dick’s Sporting Goods, and Bon-Ton. JCPenney, Dick’s Sporting Goods, and Bon-Ton serve as collateral for the loan and the remaining anchors own their improvements and ground lease the underlying land from the City of Syracuse. The mortgage loans are sponsored by various entities and principals related to Pyramid Management Group, LLC.

As of March 2014, Destiny USA had a collateral occupancy of 85.1% and sales were $457 per sf for in-line tenants. The resulting occupancy costs for the in-line tenancy is 14.1%

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ 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 $39.0 million. To value the property, we applied a 7.50% capitalization rate to arrive at a value of $520.0 million. Our resulting KBRA Loan to Value (KLTV) was 82.7%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental and appraisal reports; our own on-site inspection of both the properties and its competitors; and legal documentation.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled JPMCC 2014-DSTY, which was published today 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 final ratings that differ from the preliminary ratings.

Class       Expected Rating       Balance (USD)       Rating Action
A       AAA(sf)       $215,000,000       Preliminary
X-A       AAA(sf)       $215,000,0001       Preliminary
X-B       AAA(sf)       $47,800,0001       Preliminary
B       AA-(sf)       $47,800,000       Preliminary
C       A-(sf)       $35,800,000       Preliminary
D       BBB-(sf)       $96,600,000       Preliminary
E       BB-(sf)       $34,800,000       Preliminary
                 

1 Notional balance

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 at http://www.krollbondratings.com/regulatory/17g-7.

Related Publications (available at https://www.kbra.com):

CMBS Property Evaluation Guidelines, published February 23, 2012

CMBS Single Borrower and Large Loan Rating Methodology, published June 10, 2011

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical:
Joseph Kelly, 646-731-2355
jkelly@kbra.com
or
Robin Regan, 646-731-2358
rregan@kbra.com
or
John Grosso, CFA, 646-731-2401
jgrosso@kbra.com
or
Josh Fischler, 646-731-2349
jfischler@kbra.com

Sharing

Contacts

Analytical:
Joseph Kelly, 646-731-2355
jkelly@kbra.com
or
Robin Regan, 646-731-2358
rregan@kbra.com
or
John Grosso, CFA, 646-731-2401
jgrosso@kbra.com
or
Josh Fischler, 646-731-2349
jfischler@kbra.com