KBRA Assigns Preliminary Ratings to BX 2024-BIO
22 Jan 2024 | New York
KBRA announces the assignment of preliminary ratings to four classes of BX 2024-BIO, a CMBS single-borrower securitization.
The collateral for the transaction is a $1.2 billion floating rate, interest-only mortgage loan. The loan has an initial two-year term with three, one-year extension options and requires monthly interest-only payments based on a SOFR cap of 4.00%. The loan is secured by the borrower’s fee simple interest in the Kendall Square Portfolio (“Kendall Square”) and Gateway of Pacific Phase I (“GoP Phase I”) property. The portfolio assets have a combined 1.1 million sf of lab/office space, 25,697 sf of retail space, 48,287 sf of amenity space, and approximately 3,442 parking stalls. Kendall Square (64.8% of allocated loan amount) is located in Cambridge, Massachusetts, approximately two miles west of the Boston CBD, and consists of two life science buildings and a 1,409-space subterranean parking garage. GoP Phase I (35.2%) is located in South San Francisco, California, approximately 10 miles south of the San Francisco CBD, and consists of one life science building and a tenant amenity center. As of September 2023, the portfolio was 98.7% leased to 11 unique tenants.
KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows using our U.S. CMBS Property Evaluation Methodology and the application of our U.S. CMBS Single Borrower & Large Loan Rating Methodology. In addition, KBRA also relied on its Global Structured Finance Counterparty Methodology for assessing counterparty risk in this transaction and its ESG Global Rating Methodology, to the extent deemed applicable.
The results of our analysis yielded a KBRA net cash flow (KNCF) for the portfolio of approximately $96.8 million, which is 12.1% below the issuer’s NCF, and a KBRA value of approximately $1.3 billion, which is 27.4% below the appraiser’s aggregate as-if funded value. The resulting in-trust KBRA Loan to Value (KLTV) is 90.7%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental, and appraisal reports, the results of our site inspection of the property, and legal documentation review.
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Note: This report was updated since its initial publication on January 22, 2024, to reflect the omission of the Methodology for Rating Interest-Only Certificates given the issuer's elimination of the Class X-CP and Class X-EXT certificates after the initial publication of the preliminary press release. These changes did not impact the ratings of any remaining classes. This report was last updated on February 14, 2024.