NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of the RAIT 2017-FL7 transaction, a $342.4 million floating-rate CRE CLO securitization.
The transaction is generally static with the exception of a 90-day ramp up period to accommodate acquisition of pre-identified unclosed assets; as well as the ability to reinvest in pre-identified assets during the reinvestment period that expires in July 2019. Initially, the transaction is expected to be collateralized by 19 loans and cash collateral. When fully ramped, the transaction is expected to be collateralized by 23 non-recourse loans with an aggregate cut-off date principal balance of $342.4 million, secured by the fee simple interests in 29 properties. Seventeen of the assets are whole loans (70.2% of the cut-off date aggregate loan pool balance) and the remaining six assets (29.8%) are pari passu participation interests in whole loans where the companion participation is held outside of the trust by an affiliate of the sponsor. During the reinvestment period, principal proceeds from loan payoffs can be used by the trust acquire any or all of the future funding companion participations (if then funded) of the in-trust assets.
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 US CMBS Multi-Borrower Rating Methodology. Since the subject transaction exhibits significant concentration, in part due to the size of its largest loan (18.4%), we also leveraged our CMBS Single Borrower and Large Loan Methodology. The results of the analysis yielded KNCF for the underlying collateral properties that was, on average, 17.4% less than the issuer cash flow. KBRA primarily relied on the direct capitalization approach, along with other valuation methods to arrive at valuations of each of the underlying properties. The KBRA values were, on average, 34.8% and 39.3% lower than the appraisers’ as-is values and stabilized values, respectively. The resulting KBRA in-trust Loan to Value (KLTV) was 119.0%. We also conducted scenario analyses to evaluate and incorporate the impact of the transaction’s structural features in our ratings assignment process.
For complete details on the analysis, please see our presale report, RAIT 2017-FL7 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 ratings that differ from the preliminary ratings.
Preliminary Ratings Assigned: RAIT 2017-FL7
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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: RAIT 2017-FL7 Representations & Warranties Disclosure Report.
Related publications (available at www.kbra.com):
- CMBS: RAIT 2017-FL7 Pre-Sale Report
- CMBS: US CMBS Multi-Borrower Rating Methodology
CMBS Single Borrower & Large Loan Rating Methodology
CMBS Property Evaluation Methodology
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).