NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to eight classes of MRCD 2019-PARK, a CMBS single-asset, single-borrower transaction
The collateral for the transaction consists of a $955.0 million portion of a $1.5 billion non-recourse first lien mortgage loan. The fixed rate loan has a five-year term and requires monthly interest-only payments. The loan is secured by the borrower’s fee simple interest in 3,165 units of the 3,221-unit Parkmerced multifamily complex in San Francisco, California.
The Parkmerced complex was constructed between 1944 and 1951. The collateral property spans 152 acres and is comprised of 3,165 units across 11 high-rise apartment towers and 154 townhouse buildings, as well as 10 common area amenity buildings. As of September 2019, the property was 94.2% leased. The broader complex includes 56 non-collateral townhouse units which are subject to release in conjunction with a development agreement with the city and county of San Francisco. The development plan includes adding 5,679 net new units for a total of 8,900 multifamily units, as well as additional parking, amenities, retail space, and office space. The borrower is not permitted to redevelop parcels that serve as collateral for the subject loan during its term.
KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows using our U.S. CMBS Property Evaluation Methodology and the application of our U.S. 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, to the extent deemed applicable.
The results of our analysis yielded a KBRA net cash flow (KNCF) for the existing collateral property of $57.5 million. We applied a capitalization rate of 7.00% and arrived at a KBRA value of $822.1 million. In order to account for the additional entitlement rights, KBRA adjusted this value up by $147.6 million, which is equal to 40.0% of the as-is value of the development rights of $369.0 million determined by the appraisal. The KBRA value after adjusting for the additional development rights is $969.7 million, resulting in a KBRA Loan to Value (KLTV) of 154.7%. The lowest rated class of the subject transaction has a KLTV of 107.4%, and such class is supported by $214.0 million of unrated subordinate certificates in the subject transaction and the MRCD 2019-PRKC securitization.
In our analysis of the transaction, we also reviewed and considered third party engineering, environmental and appraisal reports; management agreement; the results of our site inspection; and legal documentation review.
For further details on KBRA’s analysis, please see our pre-sale report, MRCD 2019-PARK, published 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.
Preliminary Ratings Assigned: MRCD 2019-PARK
Class |
Initial Class Balance |
Expected KBRA Rating |
A |
$186,000,000 |
AAA (sf) |
B |
$29,800,000 |
AAA (sf) |
C |
$23,000,000 |
AA+ (sf) |
D |
$63,200,000 |
A+ (sf) |
E |
$163,000,000 |
BBB- (sf) |
F |
$101,000,000 |
BB- (sf) |
G |
$175,000,000 |
B- (sf) |
J |
$139,000,000 |
NR |
HRR |
$75,000,000 |
NR |
X |
$186,000,0001 |
AAA (sf) |
1Notional balance. |
To access ratings, reports and disclosures, click here.
Related Publications: (available at www.kbra.com)
- MRCD 2019-PARK Pre-Sale Report
- U.S. CMBS Property Evaluation Methodology
- U.S. CMBS Single Borrower and Large Loan Rating Methodology
- Methodology for Rating Interest-Only Certificates in CMBS Transactions
- Global Structured Finance Counterparty Methodology
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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) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
