News Column

Kroll Bond Rating Agency Assigns Preliminary Ratings to BAMLL 2014-520M

July 29, 2014

NEW YORK--(BUSINESS WIRE)-- Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to four classes of BAMLL 2014-520M, a $675.0 million CMBS large loan fixed-rate transaction (see ratings list below).

The collateral for the securitization consists of a single, non-recourse, first lien mortgage loan that is secured by the borrower’s fee simple interest in 1.0 million square feet (sf) of 520 Madison Avenue. The property is a 43-story, Class A, office building located on Madison Avenue between 53rd and 54th Streets, in the Manhattan borough of New York City, New York. The property consists of 989,311 sf of office space, 23,301 sf of retail space, and 21,831 sf of storage space. The property was built in 1982 and subsequently renovated in 2008. As of June 2014, the property was 99.6% leased, primarily to financial services firms, the two largest of which are Jefferies LLC and The Carlyle Group. Each of these tenants are both High Quality Credit Worthy Tenants (HQCWTs) that together account for 50.7% of total base rent. The collateral is majority owned by certain family members as well as current and former employees of Tishman Speyer, which developed the subject.

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flow using our CMBS Property Evaluation Guidelines, 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 $69.9 million. To value the property, we applied a 7.0% capitalization rate to arrive at a value of $998.2 million. KBRA adjusted the value downward by $22.2 million, which is portion of the sponsor’s unreserved tenant improvement and leasing commission obligations. Our resulting KBRA value was $976.0 million and our KBRA Loan to Value (KLTV) was 69.2%. 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 properties and its competitors; and legal documentation.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled BAMLL 2014-520M, 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       Expected Rating       Balance (USD)       Rating Action
A       AAA(sf)       $506,400,000       Preliminary
X       AAA(sf)       $506,400,0001       Preliminary
B       AA-(sf)       $70,000,000       Preliminary
C       A-(sf)       $98,600,000       Preliminary

1 Notional balance

           


17g-7 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 at https://www.krollbondratings.com/show_report/1371.

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

CMBS BAMLL 2014-520M 17g7 Disclosure Report

CMBS Property Evaluation Guidelines, published June 10, 2011

CMBS Single Borrower and Large Loan Rating Methodology, published August 8, 2011

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).



Kroll Bond Rating Agency, Inc.

Analytical Contacts:

Monika Joshi, 646-731-2360

mjoshi@kbra.com

or

Dayna Volpe, 646-731-2391

dvolpe@kbra.com

or

Keith Kockenmeister, 646-731-2349

kkockenmeister@kbra.com

or

Darrick Antell, 646-731-2338

dantell@kbra.com


Source: Kroll Bond Rating Agency, Inc.


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