KBRA announces the assignment of preliminary ratings to five classes of BX 2023-XL3, a CMBS single-borrower securitization.

The collateral for the transaction is a $1.0 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 SOFR cap of 5.00%. The loan is secured by the borrowers’ fee simple interests in 109 industrial assets. In total, the portfolio contains 8.5 million sf and is located in nine states throughout the US. The top five markets include California (61.9% of allocated loan amount), Texas (13.2%), Tennessee (9.8%), Florida (4.5%) and Oregon (3.9%). As of October 2023, the property was 94.8% leased to over 390 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 property of approximately $73.2 million, which is 9.1% below the issuer’s NCF, and a KBRA value of approximately $998.4 million, which is 35.9% below the appraiser’s aggregate as-is value. The resulting in-trust KBRA Loan to Value (KLTV) is 100.2%. 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.

To access ratings and relevant documents, click here.

Click here to view the report.

Related Publications

• U.S. CMBS Property Evaluation Methodology
• U.S. CMBS Single Borrower and Large Loan Rating Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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