KBRA Assigns Preliminary Ratings to FREMF 2018-K733 and Freddie Mac Structured Pass-Through Certificates K-0733 | Financial Buzz

KBRA Assigns Preliminary Ratings to FREMF 2018-K733 and Freddie Mac Structured Pass-Through Certificates K-0733

Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of
preliminary ratings to nine classes of FREMF Series 2018-K733 mortgage
pass-through certificates and five classes of Freddie Mac structured
pass-through certificates (SPCs), Series K-0733 (see ratings list
below). FREMF Series 2018-K733 is a $1.0 billion CMBS multi-borrower
transaction. Freddie Mac will guarantee six classes of certificates
issued in the underlying Series 2018-K733 securitization and will
deposit the guaranteed underlying certificates into a separate trust
that will issue the SPCs.

The underlying transaction is collateralized by 44 fixed-rate
multifamily mortgage loans. The loans have principal balances that range
from $4.6 million to $67.2 million. The largest exposure is represented
by IMT Gallery 421 (6.7%), a 291-unit, Class-A, mid-rise multifamily
complex located in Long Beach, California, approximately 21 miles south
of the Los Angeles CBD. The five largest loans represent 26.1% of the
cut-off date balance and also include The Arbors At Franklin Township
(5.5%), Montair At Somerset Hill (5.3%), Xander 3900 (4.7%), and
Providence At Old Meridian (4.0%). The assets are located in 21 states,
with the three largest concentrations in Texas (20.8%), Washington
(8.3%), and Florida (8.2%).

KBRA’s analysis of the underlying transaction incorporated our CMBS
Multi-Borrower rating process that begins with our analysts’ evaluation
of the underlying collateral properties’ financial and operating
performance, which is used to determine KBRA’s estimate of sustainable
net cash flow (KNCF) and KBRA value using our U.S.
Property Evaluation Methodology. KBRA’s weighted average KNCF
for the portfolio is 3.1% less than the issuer’s NCF. KBRA
capitalization rates were applied to each asset’s KNCF to derive
individual property values that, on an aggregate basis, were 42.3% less
than third party appraisal values. The weighted average KBRA
capitalization rate for the transaction is 8.60%. The KBRA credit model
deploys rent and occupancy stresses, probability of default regressions,
and loss-given default calculations to determine losses for each
collateral loan, which are then used to assign our credit ratings.

For complete details of the analysis, please see our pre-sale report, FREMF
2018-K733, published at www.kbra.com.
The report includes our KBRA
Comparative Analytic Tool (KCAT). KCAT is an easy to use,
Excel-based workbook that provides the following information:

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.

Preliminary Ratings Assigned: FREMF 2018-K733

*Notional balance

Preliminary Ratings Assigned: Freddie Mac Structured Pass-Through
Certificates, Series K-0733

*Notional balance

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, 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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