NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of BSPRT 2018-FL3, a $610.0 million managed commercial real estate collateralized loan obligation (CRE CLO) securitization, with a 24-month reinvestment period that includes a 120-day ramp-up period. BSPRT Operating Partnership, an affiliate of Benefit Street Partners, L.L.C., will serve as the transaction’s collateral manager.
The transaction will initially be collateralized by 28 CRE whole loan (or senior participations therein) with an aggregate cut-off date balance of $522.1 million, along with $87.9 million of cash that can be used to acquire loans during the ramp-up period. Previously unidentified whole loans and participations may be acquired during the ramp-up and reinvestment periods, subject to eligibility and reinvestment criteria. The eligibility criteria includes, among other things, maximum stabilized LTV and minimum stabilized DSC requirements; pool level concentration limits for loan size, property type and geographic location; certain restrictions on participation interests and future funding assets; and that the rating condition must be satisfied with respect to KBRA. Furthermore, during the life of the transaction, the collateral manager is permitted to sell or exchange defaulted assets, as well as sell up to 5.0% and exchange up to 2.5% of credit risk assets, subject to the eligibility criteria and other requirements.
The transaction also includes interest coverage (IC) and overcollateralization (OC) cash diversion tests which, in addition to structural subordination, provide credit enhancement to the rated notes. Should either of the tests not be satisfied, interest proceeds remaining after payment of Class D interest would be diverted to pay down the senior notes in a sequential manner.
All but one of the 28 initial loans have floating interest rates indexed to one-month Libor. The loans are secured by the fee and leasehold interests in 32 properties. The initial pool’s property-types include multifamily (37.2% of the initial loan collateral of $522.1 million), lodging (30.8%), office (20.0%), and retail (11.9%). The eligibility criteria also permit the acquisition of industrial, manufactured housing, self-storage and mixed-use assets.
KBRA’s analysis of the transaction involved evaluation of property cash flows and values within initial loan pool using our CMBS Property Evaluation Methodology. The results of the analysis yielded KBRA values that were, on a weighted average basis, 38.7% and 48.6% lower than the appraisers’ as-is values and stabilized values, respectively, and a KBRA Loan to Value (KLTV) for the initial loan pool of 115.1%. 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 review of the various structural features of the transaction, including ramp-up, reinvestment, and 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 on the analysis, please see our pre-sale report, BSPRT 2018-FL3, 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: BSPRT 2018-FL3|
|Class||Initial Note Balance||Expected KBRA Rating|
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 available Representations & Warranties Disclosure report.
Related Publications: (available at www.kbra.com)
- BSPRT 2018-FL3 Pre-Sale Report
- BSPRT 2018-FL3 KBRA CRE CLO KCAT
- U.S. CMBS Multi-Borrower Rating Methodology
- CMBS Property Evaluation Methodology
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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.