Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to three classes of AOA 2015-1177, a $360.0 million CMBS single borrower transaction (see ratings list below).

The collateral for the securitization consists of a single, non-recourse, first lien, fixed-rate mortgage loan that is secured by the borrower’s fee simple interest in 1177 Avenue of the Americas, a 1.0 million square foot, 47-story, Class-A, office building located on Avenue of the Americas (6th Avenue) between 45th and 46th Streets in the Manhattan borough of New York City. The property, which was built in 1992, is comprised of 969,217 sf of office space, 51,660 sf of concourse space, 5,064 sf of retail space, and 4,045 sf that are used for storage and the management office. As of October 2014, the property was 91.9% leased, primarily to legal and financial services firms. The two largest tenants are Kramer Levin Naftalis & Frankel LLP (31.7% of base rent) and Bank Hapoalim (8.4%). Together, the two tenants account for 40.1% of total base rent. The subject is owned by a joint venture between the California Teachers’ Retirement System (CalSTRS), Silverstein Properties, and UBS (US) Trumbull Property Fund LP.

KBRA’s analysis of the transaction included a detailed evaluation of the property’s 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 $35.6 million. To value the property, we applied a 7.25% capitalization rate to arrive at a KBRA value of $491.6 million and a KBRA Loan to Value (KLTV) of 73.2%. 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 property and legal documentation.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled AOA 2015-1177, 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)   $248,780,000   Preliminary
X-A   AAA(sf)   $294,985,0001   Preliminary
B   AA-(sf)   $46,205,000   Preliminary
C   NR   $50,543,000   N/A
D   NR   $14,472,000   N/A
     

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 here.

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

CMBS Property Evaluation Guidelines, published February 23, 2012
CMBS Single Borrower and Large Loan Rating Methodology, published June 10, 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).