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KBRA Downgrades All Ratings for MSSG 2017-237P

19 Aug 2025   |   New York

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KBRA downgrades all outstanding ratings for MSSG 2017-237P, a CMBS SASB transaction. The rating actions follow a surveillance review of the transaction, which has exhibited a further decline in performance since KBRA’s last ratings change in August 2024, primarily as a result of lease rollover, which has caused a decrease in occupancy and KNCF. The change in KLTV from issuance is mostly due to an increase in our capitalization rate (7.50% versus 6.75% at securitization) and, most recently, additional deductions from value to account for lease rollover costs through 2027. The rating changes also reflect the strength of the Grand Central office submarket and the sponsor’s commitment to the loan, which is current, and has never been modified, delinquent, or with the special servicer.

The trust collateral consists of four pari passu A notes totaling $132.6 million and four B notes totaling $345.2 million. The remaining portion of the $693.2 million whole mortgage loan consists of eight pari passu A notes totaling $215.4 million, which are not part of the trust collateral. The 10-year, fixed-rate whole loan is secured by the borrower’s fee and leasehold condominium interests in a 21-story, 1.3 million sf Class-A office building at 237 Park Avenue in Midtown Manhattan’s Grand Central submarket. Affiliates of RXR Realty LLC (RXR) and Walton Street Capital (Walton Street) are the loan sponsors.

KBRA analyzed the cash flow for the property utilizing information from the trustee and servicer to determine KNCF. The analysis produced a KNCF of $40.9 million and a KBRA adjusted value of $406.9 million ($325 per sf). The current KLTV of 170.4% is up from 135.7% at last review and 89.2% at issuance. KBRA identified the loan as a K-LOC and maintains its KPO of Underperform because of declining performance and impending tenant rollover in 2026 and 2027.

Details concerning the classes with rating changes are as follows:

  • Class A to A- (sf) from AA (sf)
  • Class X-A to A- (sf) from AA (sf)
  • Class X-B to A- (sf) from AA (sf)
  • Class B to BBB- (sf) from A (sf)
  • Class C to BB- (sf) from BBB (sf)
  • Class D to B- (sf) from BB- (sf)
  • Class E to CCC (sf) from B- (sf)

To access ratings and relevant documents, click here.

Click here to view the report.

Related Publication

Methodologies

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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