KBRA Downgrades Two Ratings and Affirms All Other Outstanding Ratings for FORT 2022-FL3
21 Feb 2025 | New York
KBRA downgrades the ratings of two notes and affirms the remaining outstanding ratings for FORT 2022-FL3, a commercial real estate collateralized loan obligation (CRE CLO) transaction. The downgrades reflect the transaction’s increase in specially serviced loans and K-LOCs with estimated losses. In addition, the rating action reflects the accumulating interest deferrals as the transaction has failed to satisfy the OC test since June 2024.
At the time of this review, the total collateral balance is $713.3 million, which is comprised of 12 first mortgage loans secured by 14 properties and a $11.7 million remaining balance related to the 57 Willougby loan, of which the collateral property was sold but holdback funds remain which are expected to further reduce the remaining loan balance. The transaction had a 24-month reinvestment period that ended in February 2024 and a replenishment period that ended in August 2024. The transaction’s total principal balance has been paid down by 39.0% since issuance primarily due to the end of the reinvestment period.
As of the January 2025 remittance period, there are three specially serviced assets (35.9% of the pool), of which one is REO (8.0%) and two are non-performing matured balloon (27.9%). An additional three loans are past maturity (6.5%).KBRA identified 10 loans (82.0%) as K-LOCs, including the specially serviced and past maturity loans. These include seven top 10 loans (75.5%):
- Shippan Landing (largest, 21.3% of the pool, 29.9% estimated loss severity)
- 300 East 42nd Street (2nd largest, 16.5%, 71.9%)
- Dayton’s Center (3rd largest, 11.4%, 30.3%)
- 145 South Wells (4th largest, 8.0%, 54.9%)
- 195 Montague (5th largest, 7.1%, 37.9%)
- Tysons International Plaza (6th largest, 7.1%)
- San Antonio Office Portfolio (10th largest, 4.1%)
One additional loan has an estimated loss:
- 57 Willoughby (1.6%, 75.0%)
Following the failure of the OC test in July 2024, Classes F and G are accumulating interest deferrals due to the transaction’s PIKable feature. The current deferral amount totals $5.7 million.
Details concerning the classes with ratings changes are as follows:
- Class F to B (sf) from BB- (sf)
- Class G to CCC (sf) from B- (sf)
To access ratings and relevant documents, click here.
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