Kroll Bond Rating Agency Assigns Preliminary Ratings to COMM 2012-FL2 Certificates

NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings for the COMM 2012-FL2 transaction (see ratings list below). COMM 2012-FL2 is a $272.75 million CMBS large loan transaction.

The collateral for the securitization is comprised of two, non-recourse, first lien mortgage loans. The loans, which are not cross-collateralized or cross-defaulted, are each secured by lodging assets. The larger loan, the CBM Portfolio, is secured by the borrowers’ interests in 40 Courtyard by Marriott select service hotels. The borrower has a fee interest in 39 of the properties, and a leasehold interest in one property. The second loan is secured by the borrower’s fee interests in 512-key full-service luxury golf and spa known as Grove Park Inn which is located in Asheville, NC. The loan is participated into a $62.7 million senior component, and a $15.3 million junior component, which is the sole source of cash flow for the Class GPI rake certificate.

KBRA’s analysis of the transaction included a detailed evaluation of the hotel’ cash flows using our CMBS Property Evaluation Guidelines, and the application of our CMBS Single Borrower & Large Loan Rating Methodology. The results of our analysis yielded a KBRA Net Cash Flow (KNCF) of $36.0 million for the CBM Portfolio and $14.4 million for the Grove Park Inn. To value the properties, we applied individual capitalization rates to each property’s KNCF. The average capitalization rate was 11.30% for the CBM Portfolio. A capitalization rate of 10.75% was used for Grove Park Inn. The results of our analysis resulted in a value of $318.7 million for the CBM Portfolio, which is 33.9% less than the third party appraisal value and $134.1 million for Grove Park Inn which is 31.1% off the appraisal value.

For complete details on the analysis, please see our Pre-Sale Report, entitled COMM 2012-FL2 which was published today at www.krollbondratings.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 final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: COMM 2012-FL2
Class	Expected Rating	Balance (US$)
A	AAA (sf)	$189,200,000
X-1	AAA (sf)	$257,450,000*
X-2	AAA (sf)	$257,450,000*
B	AA (sf)	$29,600,000
C	A (sf)	$38,650,000
GPI	BBB (sf)	$15,300,000
*Notional Amount

17g-7 Disclosure:

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled COMM 2012-FL2 17g7 Disclosure Report.

Related publications:

CMBS Property Evaluation Guidelines, published June 10, 2011

CMBS Single Borrower & Large Loan Rating Methodology, published August 8, 2011

About Kroll Bond Rating Agency

Kroll Bond Rating Agency, Inc. (www.krollbondratings.com) is registered with the SEC as a nationally recognized statistical rating organization (NRSRO). Kroll Bond Rating Agency was established in 2010 to restore trust in credit ratings by establishing new standards for assessing risk and by offering accurate, clear, and transparent ratings.