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KBRA Assigns Preliminary Ratings to CGCMT 2019-GC43

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to 13 classes of CGCMT 2019-GC43 (see ratings list below), a $936.9 million CMBS conduit transaction collateralized by 34 commercial mortgage loans secured by 75 properties.

The collateral properties are located in 28 states, with the top three states represented by Texas (20.2%), California (16.9%), and New York (15.7%). The pool has exposure to all the major property types, with the top three being office (51.3%), retail (21.7%), and mixed use (8.7%). The loans have principal balances ranging from $3.0 million to $84.4 million for the largest loan in the pool, 30 Hudson Yards (9.0%), which is secured by a 1.4 million sf, 26-story condominium unit within a 2.6 million sf, 90-story, Class-A office building located in the Hudson Yards neighborhood of New York City’s borough of Manhattan. The five largest loans, which also include Kawa Mixed-Use Portfolio II (8.3%), California Office Portfolio (8.3%), USAA Office Portfolio (8.0%) and Grand Canal Shoppes (7.5%), represent 41.2% of the initial pool balance, while the top 10 loans represent 67.4%.

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 U.S. CMBS Property Evaluation Methodology. On an aggregate basis, KNCF was 10.0% 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, 39.1% less than third party appraisal values. The pool has an in-trust KLTV of 103.6% and an all-in KLTV of 107.0%. 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.

Preliminary Ratings Assigned: CGCMT 2019-GC43

Class

Initial Class Balance

Expected KBRA Rating

A-1

$8,955,000

AAA (sf)

A-2

$41,294,000

AAA (sf)

A-3

$100,000,000 – $270,000,0001

AAA (sf)

A-4

$297,302,000 – $467,302,0001

AAA (sf)

A-AB

$13,585,000

AAA (sf)

A-S

$54,097,000

AAA (sf)

B

$57,479,000

AA- (sf)

C

$42,827,000

A- (sf)

D

$27,048,000

BBB (sf)

E

$20,287,000

BBB- (sf)

F

$15,778,000

NR

G

$11,271,000

NR

J-RR

$9,016,000

NR

K-RR

$32,684,165

NR

X-A

$685,233,0002

AAA (sf)

X-B

$100,306,0002

AAA (sf)

X-D

$47,335,0002

BBB- (sf)

X-F

$15,778,0002

NR

X-G

$11,271,0002

NR

VRR Interest

$35,250,000

NR

 

1The exact initial certificate balances will not be determined until final pricing; however, they are expected to fall within the above ranges. 2Notional balance.

For complete details on the analysis, please see our pre-sale report 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 ratings that differ from the preliminary ratings.

To access ratings, reports and disclosures, click here.

Related Publications: (available at www.kbra.com)

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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 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.

Contacts

Analytical:

Elizabeth Yash, Associate Director

(646) 731-3346

[email protected]

Yee Cent Wong, Senior Managing Director

(646) 731-2374

[email protected]com

Sacheen Shah, Director

(646) 731-3363

[email protected]

Dayna Carley, Senior Director

(646) 731-2391

[email protected]

Business Development:

Michele Patterson, Managing Director

(646) 731-2397

[email protected]

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