KBRA Downgrades Four Ratings and Affirms All Other Ratings for NCMS 2022-JERI
12 Apr 2024 | New York
KBRA downgrades the ratings of four classes of certificates and affirms all other outstanding ratings for NCMS 2022-JERI, a $149.2 million CMBS SASB transaction. The downgrades are the result of the loan’s status with the special servicer, the challenging commercial real estate finance landscape, and current interest rate environment.
The collateral for the transaction is a $149.2 million floating-rate, non-recourse, first lien mortgage loan. The loan is backed by two three-story, Class-A office buildings totaling 665,592 sf in Jericho, New York. There is also $20.0 million of existing mezzanine debt held outside the trust. The IO loan had an initial two-year term that ended in January 2024 with three one-year extension options.
The loan was originally scheduled to mature in January 2024 and the borrower refused to purchase a replacement cap agreement to exercise the first extension option. The loan was subsequently transferred to special servicing and as of March 2024, it is current and listed as matured performing. In a breach of the loan agreement, the borrower distributed about $5.0 million to an outside entity instead of paying expenses related to the property over the last year and a half, according to the servicer. The special servicer appointed a receiver in February 2024, replaced the affiliated management company and initiated judicial foreclosure. The sponsor of the borrower is Menachem Meisner, and the property was previously managed by Onyx Management Group.
KBRA analyzed the cash flow for the property utilizing information from the trustee and servicer to determine KNCF. The analysis produced a KNCF of $9.8 million and a KBRA value of $103.2 million ($155 per sf). The resulting in-trust KLTV is 144.6%, up from 134.5% at last review and 126.6% at securitization. KBRA identified the loan as a K-LOC and maintained the loan’s KPO of Underperform due to its status with the special servicer and weak fundamentals in the office sector.
Details concerning the classes with ratings changes are as follows:
- Class C to BBB (sf) from A- (sf)
- Class D to BB (sf) from BBB- (sf)
- Class E to B (sf) from BB- (sf)
- Class F to CCC (sf) from B- (sf)
To access rating and relevant documents, click here.
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