Kroll Bond Rating Agency Assigns Preliminary Ratings to Olympic Tower 2017-OT

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of Olympic Tower 2017-OT, a $480.0 million CMBS single borrower transaction (see ratings list below).

The collateral for the securitization consists of a $480.0 million portion of a $760.0 million single, non-recourse, first lien, fixed-rate mortgage loan that is secured by the borrower’s leasehold interest in a 525,372 sf, mixed-use retail and office condominium, comprised of the office and retail portions of a 52-story mixed-use tower and three adjoining five and seven-story buildings located on Fifth Avenue between 51st and 52nd Streets. The property, which was constructed in 1975 and renovated in 2013 and 2016, contains 401,592 sf of office space, 112,452 sf of retail space, and 11,328 sf of storage space. As of April 2017, the property was 98.8% leased to 22 tenants, the five largest of which account for 75.0% of total base rent.

The five largest tenants by base rent at the property are Cartier, a High Quality Credit Worthy Tenant (HQCWT); NBA Properties, Inc. (HQCWT), Versace USA, Inc. (HQCWT), Richemont North America (HQCWT), and Armani Exchange.

The loan sponsors are OMERS Administration Corporation (67.0% ownership) and Crown Acquisitions (33.0% ownership).

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 $64.1 million. To value the property, we applied a blended capitalization rate of 6.75% to arrive at a KBRA value of $950.1 million and a KBRA Loan to Value (KLTV) of 80.0%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental and appraisal reports; the results of our site inspection of the property, and legal documentation review.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled Olympic Tower 2017-OT, 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: Olympic Tower 2017-OT

Class Expected Rating Balance (US$)
A AAA(sf) $230,597,000
X-A AAA(sf) $230,597,000*
B AA-(sf) $35,990,000
C A-(sf) $28,821,000
X-B AAA(sf) $64,811,000*
D BBB-(sf) $56,092,000
E BB-(sf) $104,500,000
VRR Interest** NR $24,000,000
*Notional balance
** The VRR Interest is intended to constitute an eligible vertical interest for purposes of the US risk retention rules and will be retained by the sponsors. It will have a balance equal to at least 5.0% of all non-residual certificates issued by the trust.
 

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 Olympic Tower 2017-OT Representations & Warranties Disclosure.

Related publications:

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:
Kroll Bond Rating Agency
Ryan Alan Lebrecht, 646-731-2440
Director
rlebrecht@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
Stephanie Ruys de Perez, 646-731-2466
Senior Analyst
sruysdeperez@kbra.com

Follow us on Twitter!
@KrollBondRating

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Ryan Alan Lebrecht, 646-731-2440
Director
rlebrecht@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
Stephanie Ruys de Perez, 646-731-2466
Senior Analyst
sruysdeperez@kbra.com

Follow us on Twitter!
@KrollBondRating