KBRA Affirms All Ratings for HERA 2021-FL1
10 Sep 2024 | New York
KBRA affirms all of its outstanding ratings for HERA 2021-FL1, a CRE CLO transaction with a two-year reinvestment period. The affirmations follow a surveillance review of the transaction, which has benefited from increased subordination levels, primarily as a result of the full payoff of five loans ($243.7 million) since the reinvestment period ended in February 2023. However, this is offset by an increase in the number of K-LOCs.
At the time of this review, the total collateral balance is $675.3 million, which is comprised of 15 first mortgage loans secured by 18 properties. As of the August 2024 remittance period, there are two loans (16.6% of the loan pool balance) that are performing matured balloon. However, according to the collateral manager the loans have recently been extended. KBRA has identified three loans (20.4%) as K-LOCs. These include:
- Paces West (5th largest, 8.9% of the pool, 11.2% estimated loss severity)
- 1307 NY Avenue (10th largest, 5.8%)
- 200 Kansas (5.7%)
The transaction’s WA KLTV is 135.3%, compared to 134.4% at last review and 135.6% at securitization. The KDSC at Index Cap is 1.03x, compared to 1.05x at last review and 0.99x at closing. The overcollateralization and interest coverage tests have each been satisfied during each distribution date since issuance.
At securitization, 16 loans (78.8% of the issuance loan pool) had related companion participations representing unfunded future advance obligations, with an aggregate unfunded amount of $225.0 million. In total, there are eight loans (69.8% of the current pool), with future advance obligations with an aggregate of $100.2 million unfunded as of March 2024.
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