KBRA Downgrades All Ratings for BBSG 2016-MRP
12 Apr 2024 | New York
KBRA downgrades all ratings for BBSG 2016-MRP, a CMBS SASB transaction. The rating downgrades follow a surveillance review of the transaction, whose KLTV has increased since KBRA’s last rating adjustments in May 2022. The collateral property continues to suffer from low occupancy, and KNCF and KBRA value are meaningfully lower than at securitization.
The transaction collateral is a $162.0 million portion of a $262.0 million non-recourse, first-lien mortgage loan collateralized by the borrower’s fee simple and leasehold interests in 540,867 sf of The Mall at Rockingham Park (MRP), a 1.0 million sf super-regional mall in Salem, New Hampshire. The whole mortgage loan consists of four pari passu senior A notes totaling $142.5 million and two subordinate B notes totaling $119.5 million. The trust collateral includes two senior A notes totaling $42.5 million and the subordinate B notes.
The loan sponsors are Mayflower Realty, LLC and Institutional Mall Investors. Mayflower Realty is a joint venture between Simon Property Group, L.P. (28.2% ownership) and Canadian Pension Plan. Institutional Mall Investors is a venture between California Public Employees' Retirement System (CalPERS) and an affiliate of Miller Capital Advisory, Inc.
The review utilized information obtained from the trustee and servicer to analyze the loan collateral. The analysis produced a KNCF of $16.0 million, in line with our last review. However, in this review KBRA increased its capitalization rate by 100 bps to 10.0% from 9.0%, which lowered our value for the mall to $159.9 million ($296 per sf). The in-trust KLTV is 163.8%, up from 147.0% at last review and 83.8% at securitization. The high KLTV indicates it will be challenging for the borrower to refinance the existing loan without additional equity and that a loan default and disposition could result in a significant loss to the trust.
KBRA maintains the K-LOC designation and the KPO of Underperform because of the decline in the mall’s operating performance, resulting in lower KNCF and higher KLTV.
Details for the classes with ratings changes are as follows:
- Class A to A (sf) from AA- (sf)
- Class X to A (sf) from AA- (sf)
- Class B to BB (sf) from BBB- (sf)
- Class C to B (sf) from BB- (sf)
- Class D to B- (sf) from B (sf)
- Class E to CCC (sf) from B- (sf)
To access rating and relevant documents, click here.
Click here to view the report.