Kroll Bond Rating Agency Europe Limited (KBRA) is pleased to announce the assignment of preliminary ratings to four classes of Salus (European Loan Conduit No. 33) DAC, a CMBS single-borrower securitisation.
The collateral for the transaction is a £367.5 million limited recourse, first lien mortgage loan. The floating rate loan has an initial three-year term with two, one-year extension options and requires quarterly interest-only payments. The loan is secured by the borrower’s freehold and long-term leasehold interests in CityPoint, a 709,236 sf, 36-story office building located in the City of London, within the EC2 postal code and nearby the boundary of the EC1 postal code, in close proximity to the Moorgate underground station. The property includes 627,887 sf of office space, with the remaining square footage comprised of retail (67,357 sf) and basement storage space (13,992 sf).
As of September 2018, the subject was 96.3% leased to 35 tenants. The five largest tenants at the property by square footage are: Simmons & Simmons LLP (22.1% of total contracted rent), an international law firm; Regus plc (15.5%), a provider of short-term and shared work space solutions; Simpson Thacher & Bartlett LLP (8.4%), an international law firm; Mimecast Services Limited (4.3%), an international technology company that specialises in business email management; and Morrison & Foerster LLP (5.0%), an international law firm. Together, these five tenants account for 55.7% of total square footage and 55.2% of total contracted rent.
KBRA’s analysis of the transaction included a detailed evaluation of the property’s cash flows and the application of our European CMBS Rating Methodology. The results of our analysis yielded a KBRA net cash flow (KNCF) of £24.6 million. To value the property, we applied a capitalisation rate of 5.00% to arrive at a KBRA Value of £491.2 million and a KBRA Loan to Value (KLTV) of 74.8%. In our analysis of the transaction, we also reviewed and considered third-party technical, environmental, and valuation reports; the results of our site inspection of the subject; and legal documentation.
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 final ratings that differ from the preliminary ratings.
Further disclosures relating to this rating action are available in the EU Information Disclosure Form. Additional information regarding KBRA policies, methodologies, rating scales, and disclosures are available at www.kbra.com.
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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.
Matthew Horner, Director, CMBS (Lead Analyst)
+353 1 669 2677
Yee Cent Wong, Senior Managing Director, CMBS
+1 (646) 731-2374
Stephen Kemmy, Director, Structured Finance
+353 1 669 2678
Eric Thompson, Senior Managing Director, Real Estate Finance Group
(Rating Committee Chair)
+1 (646) 731-2355