KBRA Affirms All Ratings For COMM 2012-CCRE1
6 Sep 2024 | New York
KBRA affirms all of its outstanding ratings for COMM 2012-CCRE1, a $57.0 million CMBS conduit transaction. The affirmations follow a surveillance review of the transaction which has two loans remaining, the performance of each is generally in line with KBRA's last ratings change in September 2023. The details of both remaining loans are outlined below.
RiverTown Crossings Mall (82.2%, K-LOC, Underperform, Non-Performing Matured Balloon)
- The loan is collateralized by a 635,769 sf portion of a 1,271,394 sf, two-story, enclosed super-regional mall located in Grandville, Michigan, approximately 10 miles south of Grand Rapids. The mall is sponsored by Brookfield.
- KBRA maintains the loan’s K-LOC designation and its KPO of Underperform based on its maturity default in June 2021 and its non-performing matured balloon status with the special servicer. According to the December 2023 rent roll, the mall is currently 85.0% occupied, however, 68 leases representing 72.2% of base rent are scheduled to expire through YE 2025. According to the most recent special servicer commentary, the lender is working with a buyer on finalizing terms for a loan assumption with a modification. In addition, the property has approximately $23.0 million in suspense in a cash management account as of July 2024. The property was re-appraised in July 2023 at a value of $72.6 million ($114 per sf), compared to $253.0 million ($398 per sf) at issuance. An ARA of $23.6 million was assigned to the loan in October 2023.
- The servicer reported occupancies and DSCs are: 92.4% / 1.20x (TTM March 2024), 91.4% / 1.19x (FY 2023), these were 93.0% and 1.69x at issuance. KBRA’s analysis resulted in an estimated loss of $76.7 million on a whole loan balance of $130.5 million (58.8% estimated loss severity).
Philadelphia Square (17.8%, K-LOC, Underperform, Non-Performing Matured Balloon)
- The loan is collateralized by 102-unit, 259-bed student housing apartment complex in Indiana, Pennsylvania, located approximately 57 miles northeast of the Pittsburgh CBD. The property offers easy access to the Indiana University of Pennsylvania campus, located less than a half a mile from the subject property.
- KBRA maintains the loan’s K-LOC designation and its KPO of Underperform based on its maturity default in May 2022 and its non-performing matured balloon status with the special servicer. According to the FY 2023 servicer-reported financials, the property is operating at a loss. The servicer has reported that declining revenue at the subject is largely due to declining enrollment at the University, which has resulted in significant declines in occupancy. The most recent rent roll dated March 2024 reported occupancy at 59.9%. The special servicer filed for a receiver and foreclosure in January 2023. The property was listed for auction in June 2024 and a bid was accepted, which is now in the final stages of approval. The property was re-appraised in May 2023 at a value of $5.3 million ($20,463 per bed), compared to $16.8 million ($64,672 per bed) at issuance. An ARA of $6.3 million was assigned to the loan in August 2024.
- The servicer reports occupancies and DSCs are: 57.0% / -0.10x (FY 2023), these were 100% and 1.55x at issuance. KBRA's analysis resulted in an estimated loss of $8.0 million on the $10.1 million loan balance (79.1% estimated loss severity).
Rating Sensitivities
Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining asset in the transaction, as well as the continuing magnitude and extent of interest shortfalls on the certificates.
To access rating and relevant documents, click here.