KBRA Assigns Preliminary Ratings to BXMT 2017-FL1

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Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of BXMT 2017-FL1, a managed commercial real estate collateralized loan obligation (CRE CLO) securitization with post-closing ability to acquire loan participations related to the transaction collateral and dispose of loans at par under certain circumstances. The transaction, at $1.0 billion, is the largest CRE CLO to be issued post crisis.

The transaction will initially be collateralized by 31 equally sized, senior non-controlling participation interests in the loans which are secured by 71 properties. Two collateral interests are each a participation interest in a combination of a mortgage loan and mezzanine loan, which are pari passu with each other. The initial trust collateral is comprised entirely of non-controlling participations in loans with a total committed balance of $3.8 billion. The participations that are held outside the transaction (the companion participations), are comprised of $2.4 billion of funded participations, and $0.4 billion if unfunded future funding commitments that relate to 28 loans (90.3%). Throughout the life of the securitization, the transaction’s principal proceeds can be used to purchase eligible funded companion participations.

KBRA’s analysis of the transaction involved a detailed evaluation of the underlying cash flows using our CMBS Property Evaluation Methodology and the application of our US CMBS Multi-Borrower Rating Methodology. The results of the analysis yielded KNCF for the underlying collateral properties that was, on average, 7.2% and 20.8% less than the issuer as-is and stabilized net cash flows, respectively. KBRA primarily relied on the direct capitalization approach to arrive at valuation of each of the underlying properties. The KBRA values were, on average, 38.6% and 48.4% lower than the appraiser’s as-is values and stabilized values, respectively. The resulting KBRA in-trust Loan to Value (KLTV) was 122.2%.

For complete details on the analysis, please see our pre-sale report, BXMT 2017-FL1 published today at www.kbra.com. The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of ratings that differ from the preliminary ratings.


Preliminary Ratings Assigned: BXMT 2017-FL1

Class of Notes   Balance   Subordination  

KBRA Rating



A   $530,000000   47.000%   AAA (sf)   June 2035
A-S   $85,000,000   38.500%   AAA (sf)   June 2035
B   $61,250,000   32.375%   AA- (sf)   June 2035
C   $58,750,000   26.500%   A- (sf)   June 2035
D   $82,500,000   18.250%   BBB- (sf)   June 2035
E   $45,000,000   13.750%   BB- (sf)   June 2035
F   $37,500,000   10.000%   B- (sf)   June 2035
Preferred Shares   $100,000,000   0.000%   NR   N/A

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s asset level representations, warranties and enforcement mechanisms that are set forth in the offering document when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled CMBS: BXMT 2017-FL1 Representations & Warranties Disclosure.

Related Publications (available at www.kbra.com):

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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Business Wire: 23:10 GMT Monday 4th December 2017

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