Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of GSMS 2017-485L, a $350.0 million CMBS single borrower transaction (see ratings list below).

The collateral for the securitization consists of a $350.0 million single, non-recourse, first lien, fixed-rate mortgage loan that is secured by the borrower’s fee simple interest in a 935,452 sf, 32-story Class-A office property located on Lexington Avenue between 46th and 47th Streets. The property, which was constructed in 1956 and renovated in 2006, is comprised of 864,340 sf of office space, 27,673 sf of ground-level retail space, a 22,812 sf (100-space) parking garage, and 20,627 sf of storage space. As of January 2017, the property was 99.4% leased to 32 tenants, the five largest of which account for 57.2% of total base rent.

The five largest tenants at the property are: SL Green Operating Partnership L.P., the sponsor and a High Quality Credit Worthy Tenant (HQCWT), pursuant to a master lease; The Travelers Companies (HQCWT); Advance Magazine Group; Leading Hotels of the World; and Fox Sports Digital Media (HQCWT).

The loan sponsor is SL Green Operating Partnership L.P.

KBRA’s analysis of the transaction included a detailed evaluation of the property’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 $31.5 million. To value the property, we applied a capitalization rate of 7.25% to arrive at a KBRA value of $434.6 million and a KBRA Loan to Value (KLTV) of 80.5%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental, and appraisal reports; the results of our site inspection of the property, and legal documentation review.

For further details on KBRA’s analysis, please see our Pre-Sale Report, GSMS 2017-485L, 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.

Preliminary Ratings Assigned: GSMS 2017-485L

 
Class     Expected Rating     Balance (US$)
A     AAA (sf)     $186,709,000
X-A     AAA (sf)     $186,709,0001
X-B     AAA (sf)     $43,931,0001
B     AA- (sf)     $43,931,000
C     A- (sf)     $32,949,000
D     BBB- (sf)     $63,911,000
HRR2     BB+ (sf)     $22,500,000
(1) Notional balance
(2) To satisfy the US risk retention rules, a third party purchaser will purchase and retain an “eligible horizontal residual interest” consisting of the Class HRR certificates, representing 5.0% of the fair value of all interests issued by the issuer on the closing date, determined in accordance with GAAP.
 

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 GSMS 2017-485L Representations & Warranties Disclosure.

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

CMBS Presale Report: GSMS 2017-485L 
CMBS Property Evaluation Methodology 
CMBS Single Borrower and Large Loan Rating Methodology

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).