NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to 18 classes of Velocity Commercial Capital 2019-3 (VCC 2019-3) mortgage-backed certificates.
VCC 2019-3 is a $162.5 million securitization collateralized by 505 small balance commercial loans secured by 512 residential rental or commercial real estate (CRE) properties. The pool is comprised of 282 fixed rate mortgages (59.8% of the total pool) and 223 adjustable rate mortgages (40.2%). The loans have an average outstanding principal balance of $321,873 which range from $13,158 (0.01%) to $2.1 million (1.3%). The weighted average appraisal loan-to-value ratio (LTV) and FICO score for the pool are 65.3% and 703, respectively.
The underlying properties are located in or near 110 Core Based Statistical Areas (CBSAs) across 37 states and the District of Columbia. The top-three CBSAs represent 39.7% of the portfolio and include New York-Newark-Jersey City, NY-NJ (22.1%), Los Angeles-Long Beach-Anaheim, CA (9.6%), and Miami-Fort Lauderdale-West Palm Beach, FL (8.0%). The three largest state exposures represent 56.9% of the portfolio and consist of California (21.7%), New York (17.8%), and Florida (17.4%).
The residential assets (sub-pool 1) are comprised of 1-4 unit rental properties (294 assets, 45.3% of the total pool balance). The commercial properties (sub-pool 2) are largely comprised of mixed use (58 assets, 14.0% of CRE), retail (44 assets, 10.4%), multifamily properties with five or more units (36 assets, 8.6%), industrial/warehouse (21 assets, 7.5%), office (32 assets, 6.6%), automotive (24 assets, 6.1%) properties. The issuer assigned 18 assets (3.5% of CRE) a property type of commercial condominium. However, KBRA reclassified this property type as industrial/warehouse, office or retail, which represents each asset’s core use.
KBRA relied on its RMBS and CMBS methodologies in order to analyze the transaction. In doing so, KBRA divided the pool into two distinct loan groupings to which we applied residential (sub-pool 1: 287 loans, 45.3% of the total pool balance) and commercial (sub-pool 2: 218 loans, 54.7%) analyses. KBRA determined losses at each rating category for each of the sub-pools which were combined to reflect the quality of the collateral, diligence, and information quality relative to typical RMBS and CMBS transactions. The losses were subsequently incorporated into our cash flow modeling, which was used to evaluate the transaction’s credit enhancement levels in the context of its modified pro rata structure.
For complete details on the analysis, please see our pre-sale report, Velocity Commercial Capital 2019-3 published at www.kbra.com. The preliminary ratings are based on information known to KBRA at the time of publication. Information received subsequent to this release could result in the assignment of ratings that differ from the preliminary ratings.
To access ratings, reports and disclosures, click here.
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:
Teena Andrade, Associate
(646) 731-2457
tandrade@kbra.com
Daniel Tegen, Senior Director
(646) 731-2429
dtegen@kbra.com
Fei Han, Analyst
(646) 731-2342
fhan@kbra.com
Jack Kahan, Senior Managing Director
(646) 731-2486
jkahan@kbra.com
Business Development Contact:
Michele Patterson, Managing Director
(646) 731-2397
mpatterson@kbra.com
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