News | July 31, 2017

Kroll Bond Rating Agency Assigns Preliminary Ratings To CGDBB 2017-BIOC


Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of CGDBB 2017-BIOC (see ratings list below).

CGDBB 2017-BIOC is a CMBS single borrower transaction that is collateralized by an $825.0 million floating rate loan that was co-originated by Citi Real Estate Funding Inc. (40.0%); Deutsche Bank AG, New York Branch (30.0%); and Barclays Bank PLC (30.0%). The loan has an initial two-year term with three, one-year extension options.

The loan is secured by the borrowers’ fee simple and leasehold interests in 15 office properties, which are primarily occupied by life sciences tenants that utilize their space for office and/or laboratory uses. The properties consist of 11 properties with a mixture of office and laboratory uses, representing 79.4% of the aggregate allocated loan amount (ALA), three office-only properties (16.5%), and one laboratory-only property (4.1%). The assets are located in seven different submarkets in two states, which include Massachusetts (52.2%) and California (47.8%). The properties are leased to approximately 41 tenants with a weighted average lease term of 9.4 years, with four tenants that account for more than 4.9% of total base rent.

KBRA’s analysis of the transaction included a detailed evaluation of the portfolio’s cash flow using our CMBS Property Evaluation Methodology 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 $83.7 million. To value the portfolio, we applied a blended capitalization rate of 8.68% to arrive at a KBRA value of $964.0 million and a KBRA Loan to Value (KLTV) of 85.6%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental, and appraisal reports, our own on-site inspections of the properties, and legal documentation.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled CGDBB 2017-BIOC, which was published today

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 that differ from the preliminary ratings.

Preliminary Ratings Assigned: CGDBB 2017-BIOC

Class       Expected Rating       Balance (US$)
A       AAA(sf)       $415,467,000
X-CP       AAA(sf)       $221,858,500(1)
X-NCP       AAA(sf)       $261,010,000(1)
B       AA-(sf)       $97,757,000
C       A-(sf)       $73,317,000
D       BBB- (sf)       $89,936,000
E       BB-(sf)       $107,273,000
VRR Interest**       NR       $41,250,000

1Notional balance

** To satisfy the US risk retention rule, the VRR Interest is expected to constitute an “eligible vertical interest” for purposes of the US risk retention rules and a portion of the VRR Interest will be retained by each of the originators in proportion to the percentage of the loan that they originated. The initial balance of the VRR Interest is approximate and is expected to represent approximately 5.0% of the aggregate initial certificate balance of all of the ABS interests issued by the issuing entity on the closing date.

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 entitled CGDBB 2017-BIOC Representations & Warranties Disclosure.

Related publications :

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).

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