KBRA Assigns Preliminary Ratings to FS RIALTO 2019-FL1

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of ratings to seven classes of FS Rialto 2019-FL1, a $426.2 million managed CRE CLO with the ability to reinvest principal proceeds for 24 months, which includes a six-month ramp-up period.

The transaction is initially collateralized by 22 whole loans (or participations therein) with an in-trust balance of $377.8 million and $48.5 million of cash collateral. The cash collateral can be used to acquire three pre-identified delayed-close loans ($43.1 million), pari passu participations related to the initial loan collateral, and previously unidentified whole loans and senior participations, provided such assets satisfy the reinvestment and eligibility criteria.

This transaction includes an interest coverage (IC) test and a par value test (also referred to as an overcollateralization (OC) 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 will be used to pay down the principal balances of the Class A through D notes in sequential order until the tests are satisfied. If interest proceeds are insufficient to satisfy the tests or pay down the applicable classes of notes, available principal proceeds will be used for such purpose.

KBRA’s analysis of the transaction involved evaluation of property cash flows and values within the loan pool using our U.S. CMBS Property Evaluation Methodology. The results of the analysis yielded KBRA values that were, on a weighted average basis, 36.6% and 47.4% lower than the appraisers’ as-is and stabilized values, respectively, and a KBRA Loan to Value (KLTV) of 121.7%. The results of this analysis were utilized in the application of our U.S. CMBS Multi-Borrower Rating Methodology. The analysis also included quantitative and/or qualitative review of the various structural features of the transaction as well as a review of the legal documents, the results of which were incorporated into our ratings assignment process.

For complete details on the analysis, please see our pre-sale report, FS RIALTI 2019-FL1 published at www.kbra.com.

To access ratings, reports and disclosures, click here.

Preliminary Ratings Assigned: FS RIALTO 2019-FL1

Class

Initial Note Balance

Expected KBRA Rating

A

$224,837,000

AAA (sf)

A-S

$47,418,000

AAA (sf)

B

$27,173,000

AA- (sf)

C

$28,237,000

A- (sf)

D

$32,501,000

BBB- (sf)

E

$9,590,000

BB- (sf)

F

$11,188,000

B- (sf)

Preferred Shares

$45,288,127

NR

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 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, 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.

Contacts

Analytical Contacts:

Ravish Kamath, Director

(646) 731-2328

rkamath@kbra.com

Michael Brown, Managing Director

(646) 731-2307

mbbrown@kbra.com

Erika Hinman, Director

(646) 731-2418

ehinman@kbra.com

Akshay Maheshwari, Senior Director

(646) 731-2418

amaheshwari@kbra.com

Business Development Contact:

Michele Patterson, Managing Director

(646) 731-2397

mpatterson@kbra.com

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