KBRA Upgrades Three Ratings and Affirms All Other Ratings for RCMF 2021-FL5

KBRA upgrades the ratings of three classes of certificates and affirms all other outstanding ratings of RCMF 2021-FL5, a CRE CLO securitization which had a 24-month reinvestment period. The rating actions reflect the increased subordination levels due to deleveraging from loan payoffs and amortization, as the transaction balance has paid down by $411.8 million (65.5% of the original transaction balance). We also note an increase in KBRA’s estimated losses for one K-LOC (8.8% of the pool balance); however, this change does not warrant a negative rating change at this time.

As of August 2024, the total collateral balance is $218.9 million, which is comprised of 12 first mortgage loans secured by 13 properties. There are five specially serviced assets (37.0% of the pool balance) of which two (11.2%) are in foreclosure and one (6.5%) is matured non-performing. KBRA identified six loans (46.0%) as K-LOCs. This includes:

The transaction’s WA KLTV is 141.3%, compared to 126.5% at last review and 134.3% at securitization. The KDSC at Index Cap is 0.65x, compared 1.02x at last review and 0.78x securitization. The overcollateralization test has been satisfied during each remittance date since closing; however, the securitization failed its interest coverage test during the February 2024 remittance period.

At securitization, 51 loans (92.5% of the issuance loan pool) had related companion participations representing unfunded future advance obligations, with an aggregate unfunded amount of $138.9 million. All the loans have been fully funded or have had the future funding expire. The reinvestment period ended for the transaction as expected in March 2023.

Details concerning the classes with rating changes are as follows:

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