KBRA Releases Monthly CMBS Trend Watch

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Kroll Bond Rating Agency (KBRA) releases September’s CMBS Trend Watch.

In our Spotlight section this month we review Dollar General. While other retailers are closing stores, the dollar-store chain segment has been in expansion mode. However, the success of dollar stores has not gone unnoticed by Amazon which added a new section on their website displaying items that cost $10 and under with free shipping. We have identified over 1,800 dollar stores in CMBS. Leading the number of stores was Dollar General with 686. As of August 2018, we identified 252 loans ($1.1 billion current allocated property balance) collateralized by 686 Dollar General properties in 151 CMBS transactions. We’ve been noticing an increasing percentage of newly built Dollar General stores among CMBS loans, as well as more leases that are expiring before maturity.

CMBS private-label pricing volume was $4.6 billion in September, bringing third quarter total volume to $17.7 billion. Year-to-date Q3 2018 private-label CMBS volume was 58.2 billion, 2.6% below this time last year.

After ending the third quarter on a slow note, it appears that volume is set to pick up fairly significantly for the fourth quarter. Through November, we have current visibility into the potential launch of more than a dozen single borrower deals, up to 10 CRE CLOs, and several conduits.

On the ratings front, KBRA published pre-sales for four deals ($3.4 billion), including one conduit, one CRE CLO, one Freddie K-Series and one single-borrower SFR. There were also 460 surveillance actions effectuated across 50 transactions in August, including 448 affirmations, 10 upgrades and two downgrades.

The three-month rolling average KDSC and KDY both decreased for their third consecutive month in September. After reaching a high of 10.7% in June, the three-month average KDY has fallen by 70 basis points to 10.0%.

To view the report, click here.


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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 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, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is 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: 22:17 GMT Wednesday 3rd October 2018

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