KBRA Assigns Preliminary Ratings to BBCMS 2019-C3

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of Preliminary ratings to 16 classes of BBCMS 2019-C3 (see ratings list below), a $936.6 million CMBS conduit transaction collateralized by 50 commercial mortgage loans secured by 517 properties.

The collateral properties are located in 39 states and the District of Columbia, with two states, California (12.9%) and Florida (10.0%) representing more than 10.0% of the pool balance. The pool has exposure to all of the major property types, with five types representing 10.0% or more of the pool balance: office (26.6%), lodging (19.9%), self-storage (13.4%), retail (12.3%), and Industrial (12.1%). The loans have principal balances ranging from $2.6 million to $57.2 million for the largest loan in the pool, SSTII Self Storage Portfolio II (6.1%), which is secured by 10 SmartStop-branded self-storage facilities that together comprise 800,961 sf or 6,903 units. The properties are located in five states within a mix of secondary (41.1% of base rent), and tertiary (58.9%) markets. The five largest loans, which also include, Vanguard Portfolio (5.9%), GNL Industrial Portfolio (5.2%), SWVP Portfolio (4.8%), and Renaissance Fort Lauderdale (4.5%) represent 26.5% of the initial pool balance, while the top 10 loans represent 45.4%.

KBRA’s analysis of the transaction incorporated our multi-borrower rating process that begins with our analysts' evaluation of the underlying collateral properties' financial and operating performance, which determine KBRA’s estimate of sustainable net cash flow (KNCF) and KBRA value using our U.S. CMBS Property Evaluation Methodology. On an aggregate basis, KNCF was 6.3% less than the issuer cash flow. KBRA capitalization rates were applied to each asset’s KNCF to derive values that were, on an aggregate basis, 38.4% less than third party appraisal values. The pool has an in-trust KLTV of 98.6% and an all-in KLTV of 107.3%. The model deploys rent and occupancy stresses, probability of default regressions, and loss given default calculations to determine losses for each collateral loan that are then used to assign our credit ratings.

For complete details on the analysis, please see our pre-sale report, BBCMS 2019-C3 published at www.kbra.com. The report includes our BBCMS 2019-C3 KBRA Conduit KCAT, an easy to use, Excel-based workbook that provides the following information:

  • KBRA Deal Tape – Contains KBRA loan level details for every loan in the pool, and the ability for users to input adjustments to KNCF and KBRA Cap Rates and see the related impact on key deal metrics.
  • KBRA Credit Metrics Comparison Tool – Enables the user to compare the subject transaction to a user-defined transaction comp set. The feature provides many of the fields that are included in our CMBS Monthly Trend Watch publication.
  • Excel-based property cash flow statements for the top 20 loans.

To access ratings, reports and disclosures, click here.

Preliminary Ratings Assigned: BBCMS 2019-C3

Class     Initial Class Balance     Expected KBRA Rating
A-1     $16,654,000     AAA (sf)
A-2     $30,000,000     AAA (sf)
A-3     (USD)1     AAA (sf)
A-4     (USD)1     AAA (sf)
A-SB     $36,000,000     AAA (sf)
A-S     $87,811,000     AAA (sf)
B     $39,808,000     AA (sf)
C     $39,807,000     A- (sf)
D     $18,349,000     BBB+ (sf)
E-RR     $27,313,000     BBB- (sf)
F-RR     $11,708,000     BB+ (sf)
G-RR     $10,537,000     BB- (sf)
H-RR     $9,367,000     B (sf)
J-RR     $36,295,542     NR
X-A     $655,654,0002     AAA (sf)
X-B     $167,426,0002     AAA (sf)
X-D     $18,349,0002     BBB+ (sf)

1The exact initial certificate balances will not be determined until final pricing; however, the aggregate initial certificate balance of the Class A-3 and Class A-4 certificates is expected to be $573.0 million 2Notional balance.

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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 designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is 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:
Caitlin Parrella, CFA, Associate
(646) 731-3310
cparrella@kbra.com

Yee Cent Wong, Senior Managing Director
(646) 731-2374
ywong@kbra.com

Lynn D’Eugenio, Senior Director
(646) 731-2487
ldeugenio@kbra.com

Contacts

Analytical Contacts:
Caitlin Parrella, CFA, Associate
(646) 731-3310
cparrella@kbra.com

Yee Cent Wong, Senior Managing Director
(646) 731-2374
ywong@kbra.com

Lynn D’Eugenio, Senior Director
(646) 731-2487
ldeugenio@kbra.com