KBRA Assigns Preliminary Ratings to GSMS 2018-RIVR

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

The collateral for the transaction is a $310.0 million non-recourse, first lien mortgage loan. The floating rate loan has an initial two-year term with five, one-year extension options and requires monthly interest-only payments. The loan is secured by the borrower’s fee simple interest in River North Point, a Class-A, LEED Gold office complex comprised of two 13-story towers totaling 1.3 million sf. The development also includes a 437,609 sf, nine-story, 535-key, Holiday Inn hotel situated on top of the south tower via an air rights lease which expires in August 2042. The property is situated along the north bank of the Chicago River adjacent the Merchandise Mart within the River North neighborhood.

As of June 2018, the property was 92.1% leased to approximately 30 tenants. The five largest tenants at the property are The Ogilvy Group, Inc., an international advertising, marketing and public relations agency; GGP Inc., a real estate investment trust that invests in shopping centers; Illinois Institute of Art, a non-profit institution focused on the arts; Ronin Capital LLC, a proprietary trading firm, and Gartner, Inc., an international research and advisory firm. Together, these five tenants account for 46.8% of the total sf and 52.9% of total base rent.

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 $24.1 million. To value the property, we applied an implied capitalization rate of 8.00% to arrive at a KBRA value of $311.2 million. The resulting KBRA Loan to Value (KLTV) is 99.6%. 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 the property, and legal documentation review.

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

                 
Class       Expected KBRA Rating       Initial Class Balance
A       AAA(sf)       $111,021,000
B       AA+(sf)       $26,122,000
C       AA-(sf)       $19,592,000
D       A(sf)       $24,033,000
E       BBB-(sf)       $37,696,000
F       BB-(sf)       $32,522,000
G       B-(sf)       $35,477,000
H       NR       $8,037,000
P*       NR       N/A

*The Class P Certificates are entitled solely to the receipt of spread maintenance premiums.

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 GSMS 2018-RIVR 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 Contacts:
KBRA
Michael McGorty, 646-731-2393
Director
mmcgorty@kbra.com
or
Michael Brown, 646-731-2307
Senior Director
mbbrown@kbra.com
or
Susannah Keagle, 646-731-3357
Senior Director
skeagle@kbra.com
or
Sean Kane, 646-731-3355
Analyst
skane@kbra.com

Contacts

Analytical Contacts:
KBRA
Michael McGorty, 646-731-2393
Director
mmcgorty@kbra.com
or
Michael Brown, 646-731-2307
Senior Director
mbbrown@kbra.com
or
Susannah Keagle, 646-731-3357
Senior Director
skeagle@kbra.com
or
Sean Kane, 646-731-3355
Analyst
skane@kbra.com