KBRA Assigns Preliminary Ratings to BX 2026-CSMO

NEW YORK--(BUSINESS WIRE)--KBRA announces the assignment of preliminary ratings to six classes of BX 2026-CSMO, a CMBS single-borrower securitization.

The collateral for the transaction is a $3.05 billion floating rate, interest-only mortgage loan. The loan is expected to have an initial two-year term with three, one-year extension options and require monthly interest-only payments. The loan will be primarily secured by the borrower’s fee simple interest in The Cosmopolitan Las Vegas Resort & Casino, a 3,032-key hotel and casino located on 8.4 acres of prime property along the Las Vegas Strip. The real property assets are owned by a joint venture formed by affiliates of BREIT Operating Partnership L.P. and Stonepeak Partners LP and leased to affiliates of MGM Resorts International under a 30-year NNN master lease, under which MGM will operate and maintain the property.

The main source of revenue available to the borrower for making payments on the mortgage loan is rent payments received from MGM under the master lease. The borrower is entitled to an annual current master lease rent of $215.1 million with 2.0% annual increases through 2037, subject to adjustment thereafter.

KBRA utilized a look-through analysis of the transaction which included a “look through” to the cash flow and value from the property operations using our North American CMBS Property Evaluation Methodology, and the application of our North American CMBS Single Borrower & Large Loan Rating Methodology. In addition, KBRA also relied on its Global Structured Finance Counterparty Methodology for assessing counterparty risk in this transaction, and its ESG Global Rating Methodology, to the extent deemed applicable.

The results of our look-through analysis yielded a KBRA net cash flow (KNCF) for the subject of approximately $340.3 million, which is 16.6% below the issuer’s NCF, and a KBRA value of approximately $3.438 billion, which is 32.6% below the appraiser’s hypothetical as-is value of the fee simple interest in the property, including personal property and intangible property. The resulting in-trust KBRA Loan to Value (KLTV) is 88.7%. 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.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies

• Structured Finance: Global Structured Finance Counterparty Methodology
• CMBS: North American CMBS Property Evaluation Methodology
• CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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