Kroll Bond Rating Agency Assigns Preliminary Ratings to COMM 2016-787S

NEW YORK--()--Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to five classes of COMM 2016-787S, a $640 million CMBS single borrower transaction (see ratings list below).

The collateral for the securitization consists of a $640 million portion of a $780 million single, non-recourse, first lien, fixed-rate mortgage loan that is secured by the borrower’s fee simple interest in a 1.7 million sf, 50-story Class-A office property located on Seventh Avenue between 51st and 52nd Street. The property, which was constructed in 1985, is comprised of 1.6 million sf of office space, 52,965 sf of retail space, and 68,000 sf that are used for a health club, a 487-seat auditorium and storage space. As of January 2016, the property was 98.3% leased to 16 tenants, the five largest of which account for 90.3% of total base rent. The five largest tenants at the property are BNP Paribas, a High Quality Credit Worthy Tenant (HQCWT); Sidley Austin, an American Lawyer (AM Law) Top 25 law firm; Willkie Farr, an AM Law Top 100 law firm, Stifel Nicolaus (HQCWT); and UBS AG (HQCWT). The subject is owned by a joint venture between CalPERS and CommonWealth Pacific, LLC.

KBRA’s analysis of the transaction included a detailed evaluation of the property’s cash flow using our CMBS Property Evaluation Methodology, 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 $72.7 million. To value the property, we applied a 7.00% capitalization rate to arrive at a KBRA value of $1.039 billion and a KBRA Loan to Value (KLTV) of 75.1%. 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 legal documentation.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled COMM 2016-787S, 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.

Preliminary Ratings Assigned: COMM 2016-787S

Class   Expected Rating   Balance (US$)
A AAA(sf) $347,885,000
X-A1 AAA(sf) $430,920,000(1)
B AA(sf) $83,065,000
C A(sf) $81,561,000
D BBB-(sf) $127,519,000

(1) Notional balance

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 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 COMM 2016-787S Representations & Warranties Disclosure.

Related publications:

CMBS Presale Report: COMM 2016-787S
CMBS Property Evaluation Methodology, published March 3, 2015
CMBS Single Borrower and Large Loan Rating Methodology, published March 3, 2015

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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 Contacts:
Fred Perreten, 646-731-2454
Director
fperreten@kbra.com
or
Michael Brown, 646-731-2307
Senior Director
mbbrown@kbra.com
or
Dayna Volpe, 646-731-2391
Director
dvolpe@kbra.com
or
Stephanie Ruys de Perez, 646-731-2466
Analyst
sruysdeperez@kbra.com

Contacts

Analytical Contacts:
Fred Perreten, 646-731-2454
Director
fperreten@kbra.com
or
Michael Brown, 646-731-2307
Senior Director
mbbrown@kbra.com
or
Dayna Volpe, 646-731-2391
Director
dvolpe@kbra.com
or
Stephanie Ruys de Perez, 646-731-2466
Analyst
sruysdeperez@kbra.com