Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to eight classes of CGCMT 2018-TBR, a $189.1 million CMBS single-asset, single-borrower transaction.

The collateral for the transaction is a $189.1 million non-recourse, first lien mortgage loan. The floating rate loan has an initial two-year term with five, one-year extension options and requires monthly interest-only payments based on one-month LIBOR plus a spread of 1.99%. The loan is secured by the borrower’s fee simple interest in the Turtle Bay Resort, a 452-key, 6-story full-service hotel and resort located in Hawaii on the island of Oahu. The asset is situated on the island’s north shore, 37 miles from the Honolulu International Airport. The hotel was constructed in 1972 and renovated in 2013 at a cost of $55 million. The collateral includes approximately 629 acres of land owned in fee.

Blackstone Real Estate partners VIII-NQ L.P. serves as the loan sponsor. Blackstone Real Estate Partners (BREP) is one of the largest real estate private equity firms in the world with $111.0 billion of assets under management and personnel and investments located globally, including Asia, Europe, and North America. BREP’s real estate portfolio includes lodging, industrial, office, residential, and retail assets.

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 $19.2 million. We applied a capitalization rate of 10.00% and arrived at a KBRA value of $191.7 million and a KBRA Loan to Value (KLTV) of 99.1%. 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, CGCMT 2018-TBR, 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 ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: CGCMT 2018-TBR

       
Class     Expected KBRA Rating     Balance (US$)
A     AAA(sf)     $68,400,000
X-CP*     AAA(sf)     $68,400,000
X-NCP*     AAA(sf)     $68,400,000
B     AA(sf)     $13,300,000
C     A+(sf)     $9,500,000
D     BBB+(sf)     $15,200,000
E     BB-(sf)     $45,030,000
F     B-(sf)     $28,215,000
VRR Interest**     NR     $9,455,000
 

* Notional balance

** To satisfy the US risk retention rules, Citi Real Estate Funding, Inc. (or its majority-owned affiliate) will retain the VRR Interest, which is intended to meet the definition of an “eligible vertical interest” under the US credit risk retention rules.

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 available CGCMT 2018-TBR Representations & Warranties Disclosure.

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

  • CMBS Pre-Sale Report: CGCMT 2018-TBR
  • CMBS Property Evaluation Methodology
  • CMBS Single Borrower and Large Loan Rating Methodology
  • Methodology for Rating Interest-Only Certificates in CMBS Transactions

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.