KBRA Assigns Preliminary Ratings to RETL 2018-RVP

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to eight classes of RETL 2018-RVP, a CMBS single-borrower securitization.

The collateral for the transaction is a $1.35 billion non-recourse, first lien mortgage loan. The floating-rate loan requires interest-only payments and has an initial three-year term with two, one-year extension options. The loan is secured by the borrowers’ fee simple and leasehold interests in 38 directly owned properties located in the U.S., as well as a pledge of all cash flows and insurance proceeds from 12 retail assets situated in Puerto Rico, and a pledge of the direct equity interests in the Puerto Rico portfolio borrowers.

The U.S. properties are located in 17 states, with five state exposures each representing 10.0% of more of the pool balance: Florida (14.6%), New Jersey (12.7%), Pennsylvania (11.0%), Arizona (10.1%), and Minnesota (10.1%). As of January 2018, the U.S. properties were 91.4% leased by approximately 945 tenants, with only three that each account for more than 3.0% of the portfolio’s total base rent: Bed Bath & Beyond (4.1%), Best Buy (3.5%), and Ross Dress for Less (3.4%).

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 $164.4 million. To value the portfolio, we applied a blended capitalization rate of 11.99%, and arrived at a value of $1.37 billion and a KBRA Loan to Value (KLTV) of 98.5%. 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 RETL 2018-RVP, 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 ratings that differ from the preliminary ratings.

 

Preliminary Ratings Assigned: RETL 2018-RVP

 
Class     Expected KBRA Rating     Initial Class Balance
A     AAA(sf)     $524,000,000
B     AA-(sf)     $159,500,000
C     A-(sf)     $137,900,000
D     BBB-(sf)     $121,900,000
E     BB-(sf)     $165,500,000
F     B-(sf)     $160,300,000
G     NR     $13,400,000
HRR*     NR     $67,800,000
X-CP     BBB-(sf)     $121,900,000**
X-EXT     BBB-(sf)     $121,900,000**

*To satisfy the US risk retention rules, one or more third-party purchasers will purchase an “eligible horizontal residual interest” consisting of the Class HRR certificates, which will represent at least 5.0% of the fair value of all interests issued on the closing date.
**Notional 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 RETL 2018-RVP 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:
Kroll Bond Rating Agency
John Triantafyllou, 646-731-2396
Associate Director
jtriantafyllou@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
Lynn D’Eugenio, 646-731-2487
Senior Director
ldeugenio@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
John Triantafyllou, 646-731-2396
Associate Director
jtriantafyllou@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
Lynn D’Eugenio, 646-731-2487
Senior Director
ldeugenio@kbra.com