KBRA Assigns Preliminary Ratings to BX 2018-BIOA

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is announces the assignment of preliminary ratings to nine classes of BX 2018-BIOA, a CMBS single-asset, single borrower (SASB) securitization.

The collateral for the transaction is a $1.4 billion non-recourse, first lien mortgage loan. The floating-rate loan requires interest-only payments and has an initial two-year term with five, one-year extension options. The loan is secured by the borrowers’ fee simple, leasehold, or leased fee interests in 27 assets, including: 18 properties (89.1% of ALA) with a mix of office and laboratory uses, seven office-only properties (8.3%), one parcel of land (1.9%), and one multifamily development (0.6%).

The portfolio assets are located in California (58.1%), Massachusetts (37.4%), and Washington (4.5%) and are primarily occupied by life sciences tenants that utilize their space for office and/or laboratory use. The properties are leased to approximately 100 commercial tenants, with only three that account for more than 5.0% of base rent: Ironwood Pharmaceuticals (11.7% of base rent), Momenta Pharmaceuticals (8.1%), and Arena Pharmaceuticals, Inc. (5.2%).

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows 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 $125.7 million. To value the portfolio, we applied a blended capitalization rate of 8.80% and made adjustments when an individual asset had a variance to the as-is appraised value that was high relative to the rest of the pool. KBRA arrived at a value of $1.46 billion and a KBRA Loan to Value (KLTV) of 96.0% for the portfolio. In our analysis of the transaction, we also reviewed and considered third-party engineering, environmental, and appraisal reports; the results of our site inspections; and legal documentation.

For further details on KBRA’s analysis, please see our pre-sale report, entitled BX 2018-BIOA, 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: BX 2018-BIOA

 

 
    Class       Expected KBRA Rating       Balance (US$)  
    A       AAA(sf)       $676,000,000  
    X-CP       AAA(sf)       $182,700,000*  
    X-NCP       AAA(sf)       $203,000,000*  
    B       AA-(sf)       $122,000,000  
    C       A(sf)       $81,000,000  
    D       BBB-(sf)       $129,000,000  
    E       BB-(sf)       $199,000,000  
    F       B(sf)       $123,000,000  
    HRR**       B-(sf)       $70,000,000  

*Notional balance
**To satisfy the US risk retention rules, a third-party purchaser will purchase an “eligible horizontal residual interest” consisting of the Class HRR certificates, representing at least 5.0% of the fair value of all interests issued on the closing date.

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 BX 2018-BIOA Representations & Warranties Disclosure.

Related Publications: (available at www.kbra.com)

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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.

Contacts

Analytical:
KBRA
Patrick McQuinn, 646-731-2445
Director
pmcquinn@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
Sean Kane, 646-731-3355
Analyst
skane@kbra.com

Contacts

Analytical:
KBRA
Patrick McQuinn, 646-731-2445
Director
pmcquinn@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
Sean Kane, 646-731-3355
Analyst
skane@kbra.com