KBRA announces the assignment of preliminary ratings to four classes of BX 2024-BIO, a CMBS single-borrower securitization.

The collateral for the transaction is a $1.2 billion floating rate, interest-only mortgage loan. The loan has an initial two-year term with three, one-year extension options and requires monthly interest-only payments based on a SOFR cap of 4.00%. The loan is secured by the borrower’s fee simple interest in the Kendall Square Portfolio (“Kendall Square”) and Gateway of Pacific Phase I (“GoP Phase I”) property. The portfolio assets have a combined 1.1 million sf of lab/office space, 25,697 sf of retail space, 48,287 sf of amenity space, and approximately 3,442 parking stalls. Kendall Square (64.8% of allocated loan amount) is located in Cambridge, Massachusetts, approximately two miles west of the Boston CBD, and consists of two life science buildings and a 1,409-space subterranean parking garage. GoP Phase I (35.2%) is located in South San Francisco, California, approximately 10 miles south of the San Francisco CBD, and consists of one life science building and a tenant amenity center. As of September 2023, the portfolio was 98.7% leased to 11 unique tenants.

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows using our U.S. CMBS Property Evaluation Methodology, its Methodology for Rating Interest-Only Certificates in CMBS Transactions, 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, its Methodology for Rating Interest-Only Certificates in CMBS Transactions, and its ESG Global Rating Methodology, to the extent deemed applicable.

The results of our analysis yielded a KBRA net cash flow (KNCF) for the portfolio of approximately $96.8 million, which is 12.1% below the issuer’s NCF, and a KBRA value of approximately $1.3 billion, which is 27.4% below the appraiser’s aggregate as-if funded value. The resulting in-trust KBRA Loan to Value (KLTV) is 90.7%. 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.

To access rating and relevant documents, click here.

Click here to view the report.

Methodologies

CMBS: U.S. CMBS Property Evaluation Methodology

CMBS: Methodology for Rating Interest-Only Certificates in CMBS Transactions

CMBS: U.S. CMBS Single Borrower & Large Loan Rating Methodology

Structured Finance: Global Structured Finance Counterparty Methodology

ESG Global Rating 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 Information Disclosure Form(s) 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 Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

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

Doc ID: 1003037

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