NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of HUNT 2018-FL2, a managed commercial real estate collateralized loan obligation (CRE CLO) securitization with a 36-month reinvestment period commencing with a 180-day ramp-up period. Hunt Investment Management, LLC will act as collateral manager for the transaction.
The transaction is initially expected to be collateralized by 20 whole loans (or participations therein) with an aggregate balance of $225.3 million and $59.7 million of cash, $44.7 million of which can be used to acquire previously unidentified whole loans and participations during the 180-day ramp-up period, and the remaining $15.0 million of which can only be used to acquire funded companion participations related to the closing date assets during the 36-month reinvestment period (which includes the ramp-up period), in all cases, subject to the satisfaction of the eligibility criteria. The eligibility criteria include, among other things, maximum stabilized LTV and minimum stabilized DSC requirements; pool level concentration limits for affiliated guarantors, property type and geographic location; certain restrictions on participation interests and future funding assets; and satisfaction of the rating condition with respect to KBRA.
The transaction waterfall includes an interest coverage test and an overcollateralization test. If either test is not satisfied on any determination date, on the following payment date, interest proceeds remaining after interest is paid to the Class D notes (and, if necessary, principal proceeds) will be diverted and used to pay down the principal balances of the Class A through D notes in sequential (alphabetical) order until the test(s) are satisfied or such classes are paid in full.
KBRA’s analysis of the transaction involved a detailed evaluation of the underlying cash flows using our CMBS Property Evaluation Methodology. The results of the analysis yielded KBRA values that were, on average, 31.5% and 47.8% lower than the appraiser’s as-is and stabilized values, respectively. The resulting KBRA Loan to Value (KLTV) was 132.5%. The results of this analysis were utilized in the application of our US CMBS Multi-Borrower Rating Methodology. The analysis also included quantitative and/or qualitative reviews of the various structural features of the transaction, including the reinvestment feature and the IC & OC tests, as well as a review of the legal documents, the results of which were incorporated into our ratings assignment process.
For complete details of the analysis, please see our pre-sale report, HUNT 2018-FL2, published 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: HUNT 2018-FL2 |
||||||
| Class | Initial Note Balance | Expected KBRA Rating | ||||
|
A |
$145,350,000 |
AAA(sf) |
||||
|
A-S |
$14,250,000 |
AAA(sf) |
||||
|
B |
$17,812,000 |
AA-(sf) |
||||
|
C |
$17,100,000 |
A-(sf) |
||||
|
D |
$24,937,000 |
BBB-(sf) |
||||
|
E |
$9,618,000 |
BB-(sf) |
||||
|
F |
$12,825,000 |
B-(sf) |
||||
|
Preferred Shares |
$43,108,000 |
NR |
||||
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 Representation & Warranties Disclosure report.
Related Publications: (available at www.kbra.com)
- HUNT 2018-FL2 Pre-Sale Report
- HUNT 2018-FL2 KBRA CRE CLO KCAT
- U.S. CMBS Multi-Borrower Rating Methodology
- CMBS Property Evaluation Methodology
CONNECT
WITH KBRA
Twitter
LinkedIn
Download
the iOS App
YouTube
About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
