KBRA Assigns Preliminary Ratings to Aventura Mall Trust 2018-AVM

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to six classes of Aventura Mall Trust 2018-AVM, a CMBS single asset, single borrower (SASB) securitization.

The collateral for the transaction is a $750.0 million portion of a $1.75 billion, non-recourse, first lien mortgage loan. The fixed-rate loan requires interest-only payments and has a 10-year term. The loan is secured by the borrower’s fee simple interest in 1.2 million sf of Aventura Mall, a mostly two-story, 2.2 million sf, super-regional mall located in Aventura, Florida, approximately 18 miles north of the Miami CBD. The collateral includes an approximately 226,000-sf expansion of the mall that was completed in November 2017, which offers a new food court and in-line tenant space. The expansion is still in its initial lease up phase.

Aventura Mall is anchored by Bloomingdales, JCPenney, Nordstrom, Macy’s, and Macy’s Men & Home. Only the JCPenney space serves as collateral for the loan. The remaining anchors own their stores and lease the underlying land from an affiliate of the sponsors. The largest major tenants include well known retailers such as Apple, Equinox Fitness, H&M, Topshop, XXI Forever, and Zara. There is also a 24-screen AMC Theatre. As of February 2018, the total mall including non-owned anchors was 95.9% occupied, while the space serving as collateral for the loan was 92.8% leased.

KBRA’s analysis of the transaction included a detailed evaluation of the property’s 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 $149.0 million. To value the property, we applied a capitalization rate of 6.75% to arrive at a KBRA Value of $2.21 billion and a KBRA Loan to Value (KLTV) of 79.3%. In our analysis of the transaction, we also reviewed and considered third-party engineering, environmental, and appraisal reports; the results of our site inspection of subject; and legal documentation.

For further details on KBRA’s analysis, please see our pre-sale report, entitled Aventura Mall Trust 2018-AVM, 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 final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: Aventura Mall Trust 2018-AVM

           
Class       Expected KBRA Rating       Balance (US$)
A       AAA(sf)       $346,700,000
X-A       AAA(sf)       $346,700,000*
B       AA-(sf)       $60,000,000
C       A-(sf)       $181,300,000
D       BBB(sf)       $118,500,000
HRR**       BBB-(sf)       $43,500,000

*Notional balance

**To satisfy the US risk retention rules, BREDS III SD NQ Holdco L.L.C., a third-party purchaser, will purchase and retain 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 Aventura Mall Trust 2018-AVM 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
Patrick McQuinn, Director
646-731-2445
pmcquinn@kbra.com
or
Michael Brown, Senior Director
646-731-2307
mbbrown@kbra.com
or
Susannah Keagle, Senior Director
646-731-3357
skeagle@kbra.com
or
Nelson Jayakar, Analyst
646-731-3317
njayakar@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
Patrick McQuinn, Director
646-731-2445
pmcquinn@kbra.com
or
Michael Brown, Senior Director
646-731-2307
mbbrown@kbra.com
or
Susannah Keagle, Senior Director
646-731-3357
skeagle@kbra.com
or
Nelson Jayakar, Analyst
646-731-3317
njayakar@kbra.com