KBRA Assigns Preliminary Ratings to Velocity Commercial Capital 2025-2 (VCC 2025-2)

KBRA assigns preliminary ratings to 12 classes of Velocity Commercial Capital 2025-2 (VCC 2025-2) mortgage-backed certificates.

VCC 2025-2 is a $392.6 million securitization collateralized by 905 small balance commercial loans secured by mortgages on 1,008 residential rental or commercial real estate (CRE) properties. The pool is comprised of 905 fixed-rate mortgages. The loans have an average outstanding principal balance of $433,859 and range from $30,931 (<0.1%) to $10.7 million (2.7%). The weighted average appraisal loan-to-value (LTV) ratio and FICO score for the pool are 60.8% and 704, respectively.

The underlying properties are located in or near 183 Core Based Statistical Areas (CBSAs) across 41 states plus the District of Columbia. The top-three CBSAs represent 31.0% of the portfolio and include New York-Newark-Jersey City, NY-NJ-PA (13.2%), Los Angeles-Long Beach-Anaheim, CA (9.9%), and Miami-Fort Lauderdale-West Palm Beach, FL (7.9%). The three largest state exposures represent 40.9% of the portfolio and consist of California (19.5%), Florida (12.3%), and New York (9.1%).

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 (599 loans, 46.0% of the total pool balance) is comprised of 598 Investor 1-4 loans (45.6%) secured by residential rental properties with four or less units and one loan (0.4%) secured by vacant land. Sub-pool 2 (306 loans, 54.0%) consists of loans secured by commercial real estate assets. This sub-pool is largely comprised of retail properties (63 assets, 12.7%), industrial properties (44 assets, 11.6%), mixed-use properties (63 assets, 8.6%), multifamily properties (32 assets, 5.9%), office properties (46 assets, 5.7%), automotive properties (26 assets, 3.0%), hospitality properties (three assets, 2.9%), commercial condominium properties (25 assets, 2.5%), an ice skating rink (one asset, 0.7%), day care properties (two assets, 0.2%), an assisted living facility (one asset, 0.1%), and one mobile home park 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.

Note: This press release was updated since its initial publication on April 2, 2025 to correct a typographical misprint of the transaction name. This did not have any impact on KBRA's analysis of ratings. This press release was last updated on April 3, 2025.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies