KBRA Affirms All Ratings for AREIT 2021-CRE5
27 Sep 2024 | New York
KBRA affirms all of its outstanding ratings for AREIT 2021-CRE5, a CRE CLO transaction with limited loan acquisition ability. The affirmations follow a surveillance review of the transaction, which has benefited from increased subordination levels, as the transaction balance has paid down by $489.0 million (49.4% of the original transaction balance). However, this is offset by an increase in the number of K-LOCs.
At the time of this review, the total collateral balance is $500.0 million, which is comprised of 18 first mortgage loans secured by 24 properties and $5.7 million of cash collateral. During the transaction’s reinvestment period, which was expected to end in September 2024, certain principal proceeds could be used to acquire future funded, non-trust pari-passu companion participations related to the closing date assets provided the acquisition criteria are satisfied. Since securitization, the transaction has received $489.0 million in principal proceeds from amortization and the full payoff of 19 loans.
As of the September 2024 remittance period, one loan (7.0%) is 60+ days delinquent. KBRA identified seven loans (50.1%) as K-LOCs. Of the K-LOCs, one (7.4%) has an estimated loss. These include six top 10 loans:
- Venture Corporate Center (2nd largest, 9.4% of the pool balance)
- Palo Alto Apartments (3rd largest, 7.6%)
- APEX Apartments and 98Fifty Cross Portfolio (4th largest, 7.4%, 49.5% estimated loss severity)
- Landmark at Lake Village East (5th largest, 7.4%)
- Terrace Park Apartments (6th largest, 7.0%)
- Cheyenne Pointe Apartments (7th largest, 6.6%)
The remaining K-LOC, DoubleTree by Hilton Hotel Little Rock, represents 4.9% of the pool balance and does not have an estimated loss at the time of this review. The transaction's WA KLTV is 142.0%, compared to 132.5% at securitization. The KDSC at Index Cap is 0.99x, compared to 0.91x at securitization. The overcollateralization test has been satisfied during each distribution date since issuance.
At securitization, 23 loans (60.1% of the issuance loan pool) had related companion participations representing unfunded future advance obligations, with an aggregate unfunded amount of $116.9 million. In total, there are currently two loans (17.4% of the current pool), with unfunded future advance obligations with an aggregate balance of $27.4 million unfunded as of September 2024.
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