NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases a special report, Coronavirus (COVID-19): Stresses Weigh on CBL Properties—CMBS Exposure Update, which provides details regarding the going concern warning issued by CBL Properties (CBL) and examines the company’s latest Q1 2020 earnings report.
The going concern warning, which appeared in CBL’s latest quarterly filing, was issued with consideration of its current financial condition, liquidity, and the projected impact from COVID-19. Under the guidance of restructuring advisors, the company strategically missed an interest payment on senior unsecured debt on June 1, 2020, in hopes of negotiating with creditors. CBL cited a high probability of failing to meet certain financial covenants in the near term. The potential bankruptcy of CBL Properties places all the company’s CMBS mortgage debt at risk of default and transfer to special servicing.
There are currently 24 loans secured by 24 properties ($1.7 billion by unpaid balance) with exposure to CBL as a sponsor. Additionally, there are 30 transactions with exposure to CBL sponsorship, of which 94.6% of the securitized debt (based on unpaid balance) resides in post-crisis (CMBS 2.0) transactions. As of the May 2020 remittance period, half of the loans—approximately 54.7% of the cohort by unpaid balance—had transferred to special servicing. In addition, five loans (15.0%) were more than 30 days delinquent and an additional nine loans (25.2%) were late on debt service payments as of May 2020 but not yet 30 days delinquent. Each of the 24 loans with exposure to CBL as a sponsor has been identified as a KBRA Loan of Concern (K-LOC) due to a transfer to the special servicer, weak collateral performance or a heightened risk of default over the near term, related to concerns regarding the sponsor’s solvency and ability to honor its mortgage obligations.
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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 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) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.