By Business Wirevia The Motley Fool
Filed under: Investing
Kroll Bond Rating Agency Assigns Final Ratings to JPMCC 2013-C10
NEW YORK–(BUSINESS WIRE)– Kroll Bond Rating Agency (KBRA) assigned its final ratings to fourteen classes of JPMCC 2013-C10, a $1.28 billion CMBS multi-borrower transaction collateralized by 50 fixed rate commercial mortgage loans that are secured by 101 properties. Concurrently, we have withdrawn our preliminary ratings of the certificates, which were assigned on February 22, 2013 (see our ratings listed below).
The mortgage loan sellers are JPMorgan Chase Bank, National Association (JPMCB), CIBC Inc. (CIBC) and Redwood Commercial Mortgage Corporation (RCMC). The respective contribution of each seller to the pool balance is as follows: JPMCB (36 loans, 81.1%), CIBC (8 loans, 12.0%) and RCMC (6 loans, 6.9%). The majority of the loans (29 loans, 69.2%) were used to refinance existing debt, while the proceeds from 21 loans (30.8%) were used for property acquisitions.
The loans have principal balances that range from $3.0 million to $130.0 million for the largest loan in the pool, which is secured by The Shops at Riverside (10.2%), a regional mall property located in Hackensack, New Jersey. The top five loans, which also include Gateway Center (8.8%), EIP Industrial Portfolio (7.1%), 111 West Jackson (6.3%) and Pot-Nets Manufactured Housing Portfolio (4.8%), represent 37.0% of the initial pool balance, and the top 10 loan exposures represent 55.0%. The properties are geographically diverse and located across 22 states with the three largest state concentrations being New Jersey (14.0%), Illinois (11.6%) and Pennsylvania (11.4%). The pool has exposure to two property types with concentrations in excess of 10%: retail (35.2%) and office (33.9%).
KBRA‘s analysis of the transaction incorporated our multi-borrower rating process that begins with our analysts’ evaluation of underlying collateral properties’ financial and operating performance, which determine KBRA‘s estimate of sustainable net cash flow (KNCF) and KBRA value. The analysis utilized our CMBS Property Evaluation Guidelines to determine KNCF, which on an aggregate basis was 3.3% less than the issuer cash flow. KBRA capitalization rates were applied to each asset’s KNCF to derive individual property values that, on an aggregate basis, were 33.4% less than third party appraisal values. The pool has an in-trust KLTV of 97.8% and an all-in LTV of 101.5%.
KNCF and KBRA capitalization rates were among the key inputs used in our credit modeling process. The model deploys rent and occupancy stresses, probability of default regressions, and loss given default calculations to determine losses for each collateral loan that were used by KBRA to assign our credit ratings for this transaction.
