Kroll Bond Rating Agency Assigns Preliminary Ratings to MSSG 2017-237P
August 07 2017 - 4:50PM
Business Wire
Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings
to seven classes of MSSG 2017-237P commercial mortgage pass-through
certificates, a CMBS single asset, single borrower (SASB)
securitization.
The collateral for the securitization consists of a $477.8
million portion of a $693.2 million non-recourse, first lien
mortgage whole loan. The fixed-rate whole loan has a 10-year term
and requires interest-only monthly payments throughout its term.
The whole loan is secured by the borrower’s fee simple interest in
a 1.3 million sf office building located at 237 Park Avenue in New
York City’s Manhattan borough, as well as its leasehold interest in
the condominium units that it owns.
As of June 2017, the property was 95.6% leased to eight tenants,
of which the five largest represent 97.9% of the total base rent.
The five largest tenants by base rent are New York and Presbyterian
Hospital, a High Quality Credit Worthy Tenant (HQCWT); JP Morgan
Chase & Co. (HQCWT), J. Walter Thompson Worldwide (HQCWT),
Jennison Associates, and the Government of Canada (HQCWT).
Affiliates of RXR Realty LCC (RXR) and Walton Street Capital
(Walton Street) collectively serve as the loan sponsor. RXR is a
vertically integrated private real estate investment company that
is engaged in investment management, property management,
development, design, construction, leasing, and financing of
commercial properties. Walton Street focuses on investment
opportunities in institutional quality commercial real estate
assets which are undervalued due to the complexity or illiquidity
of the existing ownership or capital structure.
KBRA’s analysis of the transaction included a detailed
evaluation of the property’s cash flow 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 $53.0
million. We applied a capitalization rate of 6.75% and arrived at a
KBRA value of $777.3 million and a KBRA Loan to Value (KLTV) of
89.2%. In our analysis of the transaction, we also reviewed and
considered third party engineering, environmental, and appraisal
reports, our own on-site inspection of the property, and legal
documentation.
For further details on KBRA’s analysis, please see our pre-sale
report, entitled MSSG 2017-237P, 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 final ratings that
differ from the preliminary ratings.
Class Rating
Balance (USD) Rating Action A
AAA (sf) 132,600,000 Preliminary
X-A AAA (sf) 132,600,000*
Preliminary X-B AAA (sf) 82,000,000*
Preliminary B AA- (sf)
82,000,000 Preliminary C A- (sf)
61,500,000 Preliminary D BBB-
(sf) 75,300,000 Preliminary E
BB- (sf) 98,800,000 Preliminary
HRR** NR 27,600,000 N/A
*Notional balance **To satisfy the US risk retention rules, 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 non-residual
interests issued by the issuer 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 MSSG 2017-237P.
Related Publications:
(available at www.kbra.com)
- MSSG 2017-237P Pre-Sale
Report
- CMBS Property Evaluation
Methodology
- CMBS Single Borrower and Large Loan
Rating Methodology
- Methodology for Rating Interest-Only
Certificates in CMBS Transactions
About Kroll Bond Rating
Agency
KBRA is registered with the U.S. Securities and Exchange
Commission as a Nationally Recognized Statistical Rating
Organization (NRSRO). In addition, KBRA is recognized by the
National Association of Insurance Commissioners (NAIC) as a Credit
Rating Provider (CRP).
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version on businesswire.com: http://www.businesswire.com/news/home/20170807006025/en/
Kroll Bond Rating AgencyAnalytical:Daniel Tegen,
646-731-2429Directordtegen@kbra.comorJames Wang, 646-731-2450Senior
Directorjwang@kbra.comorMichael Brown, 646-731-2307Senior
Directormbbrown@kbra.comorRobin Regan, 646-731-2358Managing
Directorrregan@kbra.com