NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of
preliminary ratings to 14 classes of COMM 2018-COR3 (see ratings list
below), a $1.0 billion CMBS conduit transaction collateralized by 41
commercial mortgage loans secured by 44 properties.
The collateral properties are located in 17 states, with three state
exposures each representing more than 10.0% of the pool balance: New
York (38.4%), California (21.7%), and Washington (13.4%). The pool has
exposure to all of the major property types, with the four largest
accounting for 77.4% of the pool balance: retail (19.8%), office
(19.7%), Lodging (19.1%) and mixed use (18.8%). The loans have principal
balances ranging from $4.0 million to $100.0 million for the largest
loan in the pool, 930 Flushing Avenue, a 315,644 sf, single-tenant,
industrial warehouse located in the Bushwick neighborhood of Brooklyn,
New York, approximately five miles east of Manhattan. The five largest
loans, which also include Hyatt @ Olive 8 (7.8%), Kingswood Center
(6.5%), 1001 North Shoreline Boulevard (6.4%) and Beekman Tower (6.3%),
represent 36.9% of the initial pool balance, while the top 10 loans
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 CMBS
Property Evaluation Methodology. On an aggregate basis, KNCF was
4.8% 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, 42.6% less than third party appraisal values. The pool has an
in-trust KLTV of 99.7% and an all-in KLTV of 104.1%. 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, COMM
2018-COR3 published today at www.kbra.com.
The report includes our COMM
2018-COR3 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.
Preliminary Ratings Assigned: COMM 2018-COR3
|Class||Initial Class Balance||Expected KBRA Rating|
1The exact initial certificate balances of the Class A-2 and
A-3 certificates will not be determined until final pricing, However,
the aggregate certificate balance of the Class A-2 and A-3 certificates
is expected to be approximately $675.251 million. Each class’ initial
certificate balance is expected to fall within the following ranges:
Class A-2 – $100.0 million to $303.0 million; Class A-3 – $372.251
million to $575.251 million. 2In satisfaction of the US Risk
Retention rules, these classes will be retained by a third-party
purchaser, are intended to constitute an “eligible horizontal residual
interest” and will represent at least 5.0% of the fair market value of
all non-residual certificates. 3Notional balance.
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 available here.
Related Publications: (available
COMM 2018-COR3 Pre-Sale Report
COMM 2018-COR3 Pre-Sale ReportU.S.
CMBS Multi-Borrower Rating Methodology
Property Evaluation Methodology
for Rating Interest-Only Certificates in CMBS Transactions
CONNECT WITH KBRA
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.