Kroll Bond Rating Agency Assigns Preliminary Ratings to BBSG 2016-MRP

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to six classes of BBSG 2016-MRP, a $162.0 million CMBS single borrower transaction (see ratings list below).

The collateral for the securitization consists of a $162.0 million portion of a $262.0 million single, non-recourse, first lien, fixed-rate mortgage loan that is secured by the borrower’s overlapping fee and leasehold interests in 540,867 sf of The Mall at Rockingham Park, a 1.0 million sf, super-regional mall located in Salem, New Hampshire, approximately three miles north of the Massachusetts border and 32 miles northwest of the Boston CBD.

The property offers four anchors and over 135 tenants that are predominately comprised of national retailers. The four anchors include JCPenney, Lord & Taylor, Macy’s, and Sears. Lord & Taylor is part of the collateral while the three remaining anchors each own their own stores, with the exception of the Sears space, which is owned by Seritage Growth Properties (NYSE: SRG). Other major tenants include well known retailers such as Apple, a High Quality Credit-Worthy Tenant (HQCWT), Express, Forever 21, Microsoft (HQCWT), Pottery Barn, Victoria Secret and William Sonoma. In addition, a Dick’s Sporting Goods is on site and occupies 78,900 sf of second level space that was formally occupied by Sears.

As of April 2016, the property and the subject collateral were 98.5% and 97.1% occupied, respectively. For the TTM period ending March 2016, the property reported comparable in-line tenant sales of $937 per sf, and an occupancy cost of 9.6%.

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 $23.4 million. To value the property, we applied a 7.50% capitalization rate to arrive at a KBRA value of $312.6 million and a KBRA Loan to Value (KLTV) of 83.8%. 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 competitors, and legal documentation.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled BBSG 2016-MRP, 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: BBSG 2016-MRP

 

 
Class         Expected Rating         Balance (US$)  
A         AAA(sf)         $42,500,000  
X         AAA(sf)         $74,100,0001  
B         AA-(sf)         $31,600,000  
C         A-(sf)         $23,800,000  
D         BBB-(sf)         $29,100,000  
E         BB(sf)         $35,000,000  

1Notional 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 BBSG 2016-MRP Representations & Warranties Disclosure.

Related publications:

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

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

Kroll Bond Rating Agency
Analytical Contacts:
Michael McGorty, 646-731-2393
Associate Director
mmcgorty@kbra.com
or
Michael Brown, 646-731-2307
Senior Director
mbbrown@kbra.com
or
Dayna Carley, 646-731-2391
Senior Director
dcarley@kbra.com
or
Alec Abrams, 646-731-2401
Analyst
aabrams@kbra.com
or
Follow us on Twitter!
@KrollBondRating

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Michael McGorty, 646-731-2393
Associate Director
mmcgorty@kbra.com
or
Michael Brown, 646-731-2307
Senior Director
mbbrown@kbra.com
or
Dayna Carley, 646-731-2391
Senior Director
dcarley@kbra.com
or
Alec Abrams, 646-731-2401
Analyst
aabrams@kbra.com
or
Follow us on Twitter!
@KrollBondRating