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KBRA Assigns Preliminary Ratings to HUNT 2018-FL2

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Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of
preliminary ratings to seven classes of HUNT 2018-FL2, a managed
commercial real estate collateralized loan obligation (CRE CLO)
securitization with a 36-month reinvestment period commencing with a
180-day ramp-up period. Hunt Investment Management, LLC will act as
collateral manager for the transaction.

The transaction is initially expected to be collateralized by 20 whole
loans (or participations therein) with an aggregate balance of $225.3
million and $59.7 million of cash, $44.7 million of which can be used to
acquire previously unidentified whole loans and participations during
the 180-day ramp-up period, and the remaining $15.0 million of which can
only be used to acquire funded companion participations related to the
closing date assets during the 36-month reinvestment period (which
includes the ramp-up period), in all cases, subject to the satisfaction
of the eligibility criteria. The eligibility criteria include, among
other things, maximum stabilized LTV and minimum stabilized DSC
requirements; pool level concentration limits for affiliated guarantors,
property type and geographic location; certain restrictions on
participation interests and future funding assets; and satisfaction of
the rating condition with respect to KBRA.

The transaction waterfall includes an interest coverage test and an
overcollateralization 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 (and, if
necessary, principal proceeds) will be diverted and used to pay down the
principal balances of the Class A through D notes in sequential
(alphabetical) order until the test(s) are satisfied or such classes are
paid in full.

KBRA's analysis of the transaction involved a detailed evaluation of the
underlying cash flows using our CMBS Property Evaluation Methodology.
The results of the analysis yielded KBRA values that were, on average,
31.5% and 47.8% lower than the appraiser's as-is and stabilized values,
respectively. The resulting KBRA Loan to Value (KLTV) was 132.5%. The
results of this analysis were utilized in the application of our US CMBS
Multi-Borrower Rating Methodology. The analysis also included
quantitative and/or qualitative reviews of the various structural
features of the transaction, including the reinvestment feature and the
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 of the analysis, please see our pre-sale report, HUNT
2018-FL2
, published at www.kbra.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 ratings that differ from the
preliminary ratings.

 

Preliminary Ratings Assigned: HUNT 2018-FL2

       
Class     Initial Note Balance     Expected KBRA Rating

A

   

$145,350,000

   

AAA(sf)

A-S

   

$14,250,000

   

AAA(sf)

B

   

$17,812,000

   

AA-(sf)

C

   

$17,100,000

   

A-(sf)

D

   

$24,937,000

   

BBB-(sf)

E

   

$9,618,000

   

BB-(sf)

F

   

$12,825,000

   

B-(sf)

Preferred Shares

   

$43,108,000

   

NR

 

Representations & Warranties 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 Representation
& Warranties Disclosure
report.

Related Publications: (available at www.kbra.com)

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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
recognized by the National Association of Insurance Commissioners as a
Credit Rating Provider and 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.

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