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Moody's Investors Service Inc.

Moody's Assigns Aaa Rating to PFP 2025-12, Ltd. Notes

Strategic Insights

— 1 min read

The Moody's Investors Service has issued a rating to one class of notes, issued by PFP 2025-12, Ltd., a managed cash flow commercial real estate collateralized loan obligation (CRE CLO). The Class A notes, referred to as the Rated Notes, have been assigned an Aaa rating (sf). The transaction has a 2.5-year re-investment period, which includes a 180-day ramp-up period, ending in December 2027. The closing date pool is collateralized by 28 collateral interests in the form of first-lien whole mortgages and senior participations secured by multifamily properties, hotels, industrial properties, anchored retail, office, and production studios. The aggregate principal balance of the collateral interests at closing is expected to be $939,656,823 with a fully ramped target collateral balance of $1,039,656,823.

Key Takeaways:

  • The transaction has a high concentration of multifamily properties, accounting for 75.1% of the total pool.
  • The weighted average loan-to-value (LTV) ratio of the closing date pool is 112.0%, with 24.0% of the total pool being acquisition financing loans and 76.0% being refinancing and recapitalization loans.
  • The top ten assets (69.5% of the total loan pool) have an LTV range of 100.4% to 117.3%.
  • The transaction is subject to a series of concentration limits and eligibility criteria during the ramp, reinvestment, and amortization periods, including a weighted average spread (WAS) covenant of 2.75%.
  • The notes on the transaction are floating rate indexed to 1-M SOFR, with no index floor required.
  • The transaction provides for criteria-based loan modifications, but these are limited to seven modifications and may include interest rate changes, delay in payment of principal, or increasing the principal balance.

Statistics:

  • Aggregate principal balance of the collateral interests at closing: $939,656,823
  • Fully ramped target collateral balance: $1,039,656,823
  • Weighted average loan-to-value (LTV) ratio of the closing date pool: 112.0%
  • Number of obligors: 17
  • Largest single obligor: $103,911,682
  • WarF: 5000
  • Weighted Average Recovery Rate (WARR): 56.75%
  • Weighted Average Life (WAL): 5.5 years
  • Weighted Average Spread (WAS): 2.75%
  • Pair-wise asset correlation: 35.0%

Sources:

  • Moody's Investors Service
  • "Moody's Approach to Rating SF CDOs" published in July 2024, available at https://ratings.moodys.com/rmc-documents/425578
  • Rating Methodologies page on https://ratings.moodys.com

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