KBRA Assigns Preliminary Ratings to WFCM 2025-5C3
6 Jan 2025 | New York
KBRA is pleased to announce the assignment of preliminary ratings to 14 classes of WFCM 2025-5C3, a $833.5 million CMBS conduit transaction collateralized by 30 commercial mortgage loans secured by 63 properties.
The collateral properties are located throughout 17 MSAs, of which the three largest are New York (22.3%), East Bay (13.6%), and Los Angeles (12.5%). The pool has exposure to all major property types, with three types representing more than 10.0% of the pool balance: multifamily (30.0%), office (23.9%), and lodging (17.6%). The loans have principal balances ranging from $4.6 million to $83.0 million for the largest loan in the pool, Radius at Harbor Bay (10.0%), a 643,220 sf, 10 property, life science, R&D, and office portfolio located in Alameda, California, approximately 10 miles south of Oakland CBD. The five largest loans, which also include POD Williamsburg (9.1%), The Wilshire Portfolio (9.0%), WAND MHC Portfolio (8.5%), and The Brazilian Court Hotel (6.5%), represent 43.1% of the initial pool balance, while the top 10 loans represent 68.1%.
KBRA’s analysis of the transaction incorporated our multi-borrower rating process that begins with our analysts' evaluation of the underlying collateral properties' financial and operating performance, which determine KBRA’s estimate of sustainable net cash flow (KNCF) and KBRA value using our North American CMBS Property Evaluation Methodology. On an aggregate basis, KNCF was 9.4% less than the issuer cash flow. KBRA capitalization rates were applied to each asset’s KNCF to derive values that were, on an aggregate basis, 38.2% less than third party appraisal values. The pool has an in-trust KLTV of 96.1% and an all-in KLTV of 97.1%. The model deploys rent and occupancy stresses, probability of default regressions, and loss given default calculations to determine losses for each collateral loan that are then used to assign our credit ratings.
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