KBRA Affirms All Ratings for JPMCC 2016-NINE
1 May 2024 | New York
KBRA affirms all of its outstanding ratings for JPMCC 2016-NINE, a CMBS SASB transaction. The affirmations follow a surveillance review of the transaction, which has exhibited a slight worsening in KLTV since last review and securitization. The magnitude of the change, however, does not warrant ratings adjustments at this time. The change is caused in part by KBRA using an as-is analysis to derive KNCF and KBRA value as the property’s in-place occupancy and net cash flow have improved since securitization. At securitization and for all prior reviews we had relied on a stabilized analysis that assumed a higher occupancy rate because the property’s occupancy was well below the market rate. We also increased our capitalization rate used to value the property in this review to reflect changes in demand for office space in the market.
The transaction collateral is an $857.0 million portion of a $1.2 billion non-recourse, first-lien mortgage loan. The whole mortgage loan is represented by six pari passu A notes totaling $1.0 billion and a $186.3 million subordinate B note. The trust collateral includes the $670.7 million senior A-1 note and the subordinate B note.
The loan is collateralized by the borrower’s fee simple and leasehold interests in 9 West 57th Street, a 50-story, 1.7 million sf Class-A office building Midtown Manhattan. The sponsor developed the property in 1972. The ground is leased from an affiliate of the borrower’s sponsor; however, both the fee simple and leasehold interests are pledged as security for the mortgage loan.
KBRA analyzed the cash flow for the property utilizing information from the trustee and servicer to determine KNCF. The property’s occupancy improved to 81.1% from 79.4% at last review and from 63.5% at issuance, and KBRA relied on an as-is analysis for this review. Our analysis generated an as-is KNCF of $119.2 million and a KBRA value of $1.70 billion ($1,014 per sf). We increased our capitalization rate 25 bps to 7.0% in this review. The resulting in-trust KLTV increased to 70.5% from 65.4% at last review and from 62.1% at securitization. KBRA maintains a KPO of Perform on the loan.
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