KBRA Downgrades Three Ratings and Affirms All Other Ratings for NCMS 2022-JERI
11 Apr 2025 | New York
KBRA downgrades the ratings of three 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 foreclosure status with the special servicer, high upcoming rollover, and weak office fundamentals in the property’s submarket. KBRA also considered the potential for interest shortfalls to impact the capital stack as the special servicer works to resolve the loan.
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 originally matured in January 2024, but the borrower refused to purchase a replacement cap agreement required to exercise the first extension option. The loan was subsequently transferred to special servicing and as of March 2025, the loan’s status is foreclosure and there are $1.2 million in outstanding advances. 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, 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 $9.0 million and a KBRA value of $95.1 million ($143 per sf), which considers an as-is distressed liquidation of the asset. The resulting in-trust KLTV is 156.9%, up from 144.6% at last review and 126.6% at securitization. Based on KBRA’s value, the trust is likely to incur principal losses upon final disposition of the collateral asset. KBRA maintains the loan’s K-LOC designation and KPO of Underperform due to its foreclosure status with the special servicer, high upcoming rollover, and weak office fundamentals in the property’s submarket.
Details concerning the classes with ratings changes are as follows:
- Class C to BBB- (sf) from BBB (sf)
- Class D to BB- (sf) from BB (sf)
- Class E to B- (sf) from B (sf)
To access ratings and relevant documents, click here.
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