KBRA announces the assignment of preliminary ratings to six classes of BX 2026-VLT10, a CMBS single-borrower securitization. The collateral for the transaction is a $1.26 billion non-recourse, first-lien mortgage loan. The fixed-rate loan will be structured with a 10-year Anticipated Repayment Date (ARD), and a 20-year final maturity. During the first 10 years, the loan will require monthly interest-only payments. After the ARD, if the loan is not paid off, a cash sweep period will be triggered for the remainder of the loan term whereby all excess cash flow remaining after the payment of the initial interest rate will be used to pay down the certificates sequentially; provided, that, the corresponding interest-bearing components will be paid down first, then the ARD additional interest, and then the component HRR.

The loan will be secured by the borrowers’ fee simple interests in a purpose-built data center asset located in New Albany, Ohio, approximately 18 miles northeast of the Columbus CBD. The collateral contains a gross building area (GBA) of approximately 432,824 sf, of which 258,773 sf is data hall space, and provides 66 megawatts (MW) of capacity. The asset has an N+1 UPS redundancy and a designated Power Usage Effectiveness (PUE) of less than 1.5. The property is 100% leased to a single hyperscale tenant, a high quality credit worthy tenant (HQCWT) as determined by KBRA, who occupies the data center on a 20-year lease that expires in July 2045.

KBRA’s analysis of the transaction included a detailed evaluation of the property’s cash flows using our North American CMBS Property Evaluation Methodology and the application of our North American 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.

The results of our analysis yielded a KBRA net cash flow (KNCF) for the subject of approximately $84.5 million, which is 18.9% below the issuer’s NCF, and a KBRA value of approximately $1.17 billion, which is 27.2% below the appraiser’s as-is value. The resulting in-trust KBRA Loan to Value (KLTV) is 108.4%. 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 properties, and legal documentation review.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies

• CMBS: North American CMBS Property Evaluation Methodology
• CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
• Structured Finance: 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 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), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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