Kroll Bond Rating Agency Assigns Preliminary Rating to NorthStar 2015-1

NEW YORK--()--Kroll Bond Rating Agency, Inc. (KBRA) is pleased to assign a preliminary ‘AAA(sf)’ rating to Class A of the NorthStar 2015-1 securitization. The transaction is a $613.0 million floating-rate commercial real estate collateralized loan obligation (CRE CLO) transaction.

The collateral for the transaction consists of twenty non-recourse loan interests consisting of whole loans and senior or pari passu funded participation interests in whole loans secured by the fee simple interests in 81 properties located in eleven states. Six trust assets (33.8%) provide for future funding in the form of a participation interest that is pari passu with the trust asset but which is not trust collateral and three of these trust assets also have a related junior participation interest that is held outside of the trust. One of the trust assets consisting of a participation interest (1.6%) also has associated mezzanine indebtedness in place with a future funding component.

KBRA’s analysis of the transaction involved a detailed evaluation of the underlying cash flows using our CMBS Property Evaluation Methodology and the application of our CMBS Single-Borrower & Large Loan Rating Methodology. The results of the analysis yielded KNCF for the underlying collateral properties that was, on average, 20.3% less than issuer cash flow. KBRA applied our stressed capitalization rates to KNCF to arrive at valuations of the underlying properties. The KBRA values were, on average, 44.5% less than the appraiser’s respective valuation. The resulting KBRA in-trust Loan to Value (KLTV) was 118.2%. The weighted average all-in KLTV for the loans was 130.8%. As part of our analysis of the transaction, we also reviewed and considered third party engineering and environmental reports, our analysts’ site visits of the collateral properties, and the transaction structure.

For complete details on the analysis, please see our presale report, NorthStar 2015-1 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.

Preliminary Rating Assigned: NorthStar 2015-1

Class           Note Balance           Expected KBRA Rating
A           $319,510,000           AAA(sf)
B           $29,880,000           NR
C           $39,840,000           NR
D           $39,840,000           NR
E           $27,580,000           NR
F           $30,640,000           NR
G           $27,580,000           NR

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s asset level representations, warranties and enforcement mechanisms that are set forth in the offering document when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled CMBS: NorthStar 2015-1 Representations & Warranties Disclosure Report.

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

CMBS: NorthStar 2015-1 Presale Report

CMBS: CMBS Single Borrower & Large Loan Methodology, published December 3, 2015

CMBS Property Evaluation Methodology, published December 3, 2015

Follow us on Twitter!
@KrollBondRating

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:
Kroll Bond Rating Agency, Inc.
Michael McGorty, 646-731-2393
mmcgorty@kbra.com
or
Robin Regan, 646-731-2358
rregan@kbra.com
or
Michael Brown, 646-731-2307
mbbrown@kbra.com
or
Alec Abrams, 646-731-2401
aabrams@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency, Inc.
Michael McGorty, 646-731-2393
mmcgorty@kbra.com
or
Robin Regan, 646-731-2358
rregan@kbra.com
or
Michael Brown, 646-731-2307
mbbrown@kbra.com
or
Alec Abrams, 646-731-2401
aabrams@kbra.com