Sustainable Green Team Ltd. (SGTM)

[brunners]

https://www.krollbondratings.com/announcements/11360

KBRA Assigns Preliminary Ratings to SGCP 2019-FL2
NEW YORK (May 15, 2019) – Kroll Bond Rating Agency (KBRA) is pleased to announce the
assignment of preliminary ratings to five classes of SGCP 2019-FL2, a $453.7 million
commercial real estate collateralized loan obligation (CRE CLO) transaction
The transaction is initially expected to be collateralized by 17 whole loans (or participations
therein), inclusive of three combination loans, with an in-trust balance of $437.0 million and
$16.7 million of cash collateral. The cash collateral can be used to acquire one pre-identified
delayed-close loan ($16.7 million) within 60 days of the closing date. In addition, the
transaction permits the acquisition of funded pari passu companion participations related to
the initial transaction collateral for a two-year period post-closing, and defaulted and credit
risk assets can be sold to the preferred shareholder at par.
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. This transaction also has a pro rata payment feature where principal proceeds
in an aggregate amount equal to 15.0% of the aggregate cut-off date balance of the mortgage
assets will be used to pay down the notes on a pro rata basis provided the note protection
tests are satisfied and no event of default has occurred.
KBRA’s analysis of the transaction included the determination of KBRA net cash flow (KNCF)
and KBRA value. The results of the analysis yielded KBRA values that were, on a weighted
average basis, 30.0% and 42.8% lower than the appraisers’ as-is values and stabilized values,
respectively, and a KBRA Loan to Value (KLTV) for the initial loan pool of 119.3%.
KNCF and KBRA value are key inputs for determination of KBRA subordination levels, which were
derived for the subject transaction using our U.S. CMBS Single Borrower and Large Loan
Rating Methodology and U.S. CMBS Multi-Borrower Rating Methodology. The analysis
also included quantitative and/or qualitative review of the various structural features of the
transaction, including reinvestment and 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 on the analysis, please see our pre-sale report, SGCP 2019-FL2,
published at www.kbra.com. 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.