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KBRA Assigns Preliminary Ratings to HUNT 2018-FL2

August 2, 2018

NEW YORK--(BUSINESS WIRE)--Aug 2, 2018--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to seven classes of HUNT 2018-FL2, a managed commercial real estate collateralized loan obligation (CRE CLO) securitization with a 36-month reinvestment period commencing with a 180-day ramp-up period. Hunt Investment Management, LLC will act as collateral manager for the transaction.

The transaction is initially expected to be collateralized by 20 whole loans (or participations therein) with an aggregate balance of $225.3 million and $59.7 million of cash, $44.7 million of which can be used to acquire previously unidentified whole loans and participations during the 180-day ramp-up period, and the remaining $15.0 million of which can only be used to acquire funded companion participations related to the closing date assets during the 36-month reinvestment period (which includes the ramp-up period), in all cases, subject to the satisfaction of the eligibility criteria. The eligibility criteria include, among other things, maximum stabilized LTV and minimum stabilized DSC requirements; pool level concentration limits for affiliated guarantors, property type and geographic location; certain restrictions on participation interests and future funding assets; and satisfaction of the rating condition with respect to KBRA.

The transaction waterfall includes an interest coverage test and an overcollateralization test. If either test is not satisfied on any determination date, on the following payment date, interest proceeds remaining after interest is paid to the Class D notes (and, if necessary, principal proceeds) will be diverted and used to pay down the principal balances of the Class A through D notes in sequential (alphabetical) order until the test(s) are satisfied or such classes are paid in full.

KBRA’s analysis of the transaction involved a detailed evaluation of the underlying cash flows using our CMBS Property Evaluation Methodology. The results of the analysis yielded KBRA values that were, on average, 31.5% and 47.8% lower than the appraiser’s as-is and stabilized values, respectively. The resulting KBRA Loan to Value (KLTV) was 132.5%. The results of this analysis were utilized in the application of our US CMBS Multi-Borrower Rating Methodology. The analysis also included quantitative and/or qualitative reviews of the various structural features of the transaction, including the reinvestment feature and the IC & OC tests, as well as a review of the legal documents, the results of which were incorporated into our ratings assignment process.

For complete details of the analysis, please see our pre-sale report, , published at . 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.

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 representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report.

Related Publications: (available at )

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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.

View source version on businesswire.com:https://www.businesswire.com/news/home/20180802005560/en/

CONTACT: Kroll Bond Rating Agency

Analytical Contacts:

Michael McGorty, Director

(646) 731-2393

mmcgorty@kbra.com

or

Michael Brown, Senior Director

(646) 731-2307

mbbrown@kbra.com

or

Nitin Bhasin, CFA, Senior Managing Director

(646) 731-2334

nbhasin@kbra.com

or

Robin Regan, Managing Director

(646) 731-2358

rregan@kbra.com

KEYWORD: UNITED STATES NORTH AMERICA NEW YORK

INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING FINANCE

SOURCE: Kroll Bond Rating Agency

Copyright Business Wire 2018.

PUB: 08/02/2018 10:45 AM/DISC: 08/02/2018 10:45 AM

http://www.businesswire.com/news/home/20180802005560/en

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