Reading Time: 3 minutes

NEW YORK–(BUSINESS WIRE)–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)

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
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
, published at
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.

Preliminary Ratings Assigned: SGCP 2019-FL2

Class     Initial Note Balance     Expected KBRA Rating
A     $231,387,000     AAA (sf)
A-S     $39,699,000     AAA (sf)
B     $25,521,000     AA- (sf)
C     $24,386,000     A- (sf)
D     $28,357,000     BBB- (sf)
E     $18,715,000     NR
F     $16,447,000     NR
G     $14,178,000     NR
H     $15,312,000     NR
Preferred Shares     $39,699,571     NR

To access ratings, reports and disclosures, click here.

Related Publications: (available at


the iOS App

About KBRA and KBRA Europe

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


Analytical Contacts:
Hinman, Associate Director
(646) 731-2418
[email protected]

Cent Wong, Senior Managing Director
(646) 731-2374
[email protected]

Bhasin, CFA, Senior Managing Director
(646) 731-2334
[email protected]

Keagle, Senior Director
(646) 731-3357
[email protected]