KBRA Assigns Ratings to MSC 2020-CNP

Kroll Bond Rating Agency (KBRA) announces the assignment of ratings to five classes of MSC 2020-CNP, a CMBS single-borrower securitization.

The collateral for the transaction is a $330.0 million portion of a $550.0 million non-recourse, first lien mortgage loan. The fixed rate loan has a ten-year term and requires monthly interest-only payments. The loan is secured by the borrower’s fee simple interest in City National Plaza, a 2.5 million sf, 52-story twin tower Class-A office asset located in downtown Los Angeles. The LEED Platinum certified towers are mirror images of each other and feature a combination of granite panels and glass. The property features high end tenant build outs and offers 3,240 parking spaces, 804 of which are located onsite within a two-level underground garage and 2,436 spaces are contained within an offsite parking garage, the latter of which also serves as the subject’s loan collateral.

As of March 2020, the property was 81.4% leased to 81 tenants. The five largest tenants include City National Bank, an HQCWT; Paul Hastings, LLP, a law firm; Jones Day, a law firm; M. Arthur Gensler Jr. & Associates, an architectural firm; and Federal Insurance Company, an insurance firm. Together, these five tenants account for 39.1% of total base rent and 32.3% of the total sf.

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows using our U.S. CMBS Property Evaluation Methodology and the application of our U.S. CMBS Single Borrower & Large Loan Rating Methodology. In addition, KBRA also relied on its Global Structured Finance Counterparty Methodology for assessing counterparty risk in this transaction, to the extent deemed applicable.

The results of our analysis yielded a KBRA net cash flow (KNCF) of $57.3 million. To value the property, we applied a capitalization rate of 7.75% to arrive at a KBRA value of $739.3 million. The resulting KBRA Loan to Value (KLTV) is 74.4%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental, and appraisal reports; the results of our site inspection of the property, and legal documentation review.

Click here to view the report. To access ratings and relevant documents, click here.

Related Publications

• U.S. CMBS Property Evaluation Methodology
• U.S. CMBS Single Borrower and Large Loan Rating Methodology
• Methodology for Rating Interest-Only Certificates in CMBS Transactions
• Global Structured Finance Counterparty Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. 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) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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