KBRA Assigns Preliminary Ratings to Velocity Commercial Capital 2026-4 (VCC 2026-4)
6 Oct 2026 | New York
KBRA assigns preliminary ratings to 12 classes of Velocity Commercial Capital 2026-4 (VCC 2026-4) mortgage-backed certificates.
VCC 2026-4 is a $499.4 million securitization collateralized by 1,271 small balance commercial loans secured by mortgages on 1,408 residential rental or commercial real estate (CRE) properties. The pool is comprised of 1,271 fixed-rate loans with an average outstanding principal balance of $392,942 and range from $34,000 (<0.1%) to $12.6 million (2.5%). The weighted average appraisal loan-to-value (LTV) ratio and FICO score for the pool are 59.7% and 699, respectively.
The underlying properties are located in or near 241 Core Based Statistical Areas (CBSAs) across 44 states plus the District of Columbia. The top-three CBSAs represent 23.2% of the portfolio and include New York-Newark-Jersey City, NY-NJ-PA (11.3%), Los Angeles-Long Beach-Anaheim, CA (7.2%), and San Francisco-Oakland-Hayward, CA (4.7%). The three largest state exposures represent 39.3% of the portfolio and consist of California (18.5%), Florida (11.3%), and Texas (9.5%).
KBRA relied on its RMBS and CMBS methodologies to analyze the transaction. In doing so, KBRA divided the pool into two distinct loan groupings, as follows: Sub-pool 1 (827 loans, 41.2% of the total pool balance) is comprised of Investor 1-4 loans. Sub-pool 2 (444 loans, 58.8%) consists of loans secured by commercial real estate assets. This sub-pool is largely comprised of office properties (72 assets, 13.1%), retail properties (84 assets, 10.9%), mixed-use properties (92 assets, 8.0%), industrial properties (53 assets, 7.8%), multifamily properties (57 assets, 6.4%), hotels (eight assets, 3.8%), automotive properties (29 assets, 3.4%), commercial condominium properties (40 assets, 3.3%), a congregate living health facility (one asset, 0.7%), schools (two assets, 0.6%), a mobile home park (one asset, 0.6%), daycare facilities (two assets, 0.2%), an assisted living facility (one asset, 0.2%), an event center (one asset, 0.1%), and an industrial PUD property (one asset, 0.1%). KBRA reclassified the mixed-use and commercial condominium property types to each asset’s respective core use and classified automotive service properties as retail for our analysis.
The RMBS and CMBS portfolio credit model results were combined, on a WA basis, to determine KBRA’s modeled expected losses at each rating category and reflect the quality of the collateral, diligence, and information quality relative to typical RMBS and CMBS transactions. The losses were subsequently incorporated into our cash flow modeling, which was used to evaluate the transaction’s credit enhancement levels in the context of its modified pro rata structure.
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