Kroll Bond Rating Agency Assigns Preliminary Ratings to CGCMT 2016-SMPL

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of CGCMT 2016-SMPL, a $540.0 million CMBS single borrower transaction.

The collateral for the transaction is a $540.0 million, non-recourse, first lien mortgage loan secured by the borrower’s interests in 102 self-storage properties. The borrowers have a fee simple interest in all of the properties except for one property that is secured by the related borrower’s leasehold interest.

The portfolio properties total 7.9 million sf (63,141 units) with assets ranging from 24,638 sf (208 units) to 170,354 sf (1,337 units). In total, 28.7% of the portfolio’s total unit count are climate-controlled. The properties are located in 28 different MSAs across 16 states and the Commonwealth of Puerto Rico. The assets were built between 1959 and 2008 and are on average approximately 22 years old. As of July 2016, the portfolio had a weighted average occupancy rate of 91.6%.

KBRA’s analysis of the transaction included a detailed evaluation of the portfolio’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 $60.7 million. To value the portfolio, we applied a blended capitalization rate of 9.72% to arrive at a KBRA value of $625.2 million and a KBRA Loan to Value (KLTV) of 86.4%. 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 legal documentation.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled CGCMT 2016-SMPL, 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 that differ from the preliminary ratings.

Preliminary Ratings Assigned: CGCMT 2016-SMPL

Class           Expected Rating           Balance (US$)
A           AAA(sf)           $301,305,000
B           AA-(sf)           $68,483,000
C           A-(sf)           $43,140,000
D           BBB-(sf)           $51,577,000
E           BB(sf)           $75,495,000
X-CP¹           AAA(sf)           $241,044,000
X-NCP¹           AAA(sf)           $301,305,000

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 CGCMT 2016-SMPL Representations & Warranties Disclosure.

Related publications:

CMBS Presale Report: CGCMT 2016-SMPL
CMBS Property Evaluation Methodology, published December 3, 2015
CMBS Single Borrower and Large Loan Rating Methodology, published March 3, 2015
Methodology for Rating Interest-Only Certificates in CMBS Transactions, published June 6, 2016

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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:
Kroll Bond Rating Agency
Albert Lee, 646-731-2448
Senior Analyst
alee@kbra.com
or
Michael Brown, 646-731-2307
Senior Director
mbbrown@kbra.com
or
Robin Regan, 646-731-2358
Managing Director
rregan@kbra.com
or
Rozeana Fonseca, 646-731-2434
Senior Analyst
rfonseca@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
Albert Lee, 646-731-2448
Senior Analyst
alee@kbra.com
or
Michael Brown, 646-731-2307
Senior Director
mbbrown@kbra.com
or
Robin Regan, 646-731-2358
Managing Director
rregan@kbra.com
or
Rozeana Fonseca, 646-731-2434
Senior Analyst
rfonseca@kbra.com