KBRA Assigns Preliminary Ratings to 1345 2025-AOA CMBS Transaction Backed by Midtown Manhattan Class-A Office Tower
Kroll Bond Rating Agency, LLC (KBRA) has announced the preliminary ratings assignment for five bond classes associated with the upcoming securitization of 1345 2025-AOA, a commercial mortgage-backed securities (CMBS) single-borrower transaction. The securitization is supported by a significant loan collateralized by one of Midtown Manhattan’s landmark office properties—1345 Avenue of the Americas.
Transaction Overview
The 1345 2025-AOA transaction is structured as a single-borrower CMBS securitization backed by a portion of a larger mortgage loan. Specifically, the underlying collateral is a $650.0 million slice of an $850.0 million non-recourse, first-lien, floating-rate mortgage loan. In addition to this funded portion, the total loan structure includes a $200.0 million future funding companion loan, which is designed to support future capital needs or leasing expenditures.
The mortgage has been originated as an interest-only loan, with an initial two-year term. The borrower has the option to extend the loan for up to three additional one-year periods, providing flexibility based on future refinancing or property performance. The borrower’s obligations are secured by both the fee simple and leasehold interests in 1345 Avenue of the Americas, a well-located and highly recognizable Class-A office building in New York City.
The Collateral Property: 1345 Avenue of the Americas
The sole asset backing this transaction is 1345 Avenue of the Americas, a 50-story office skyscraper comprising approximately 2.0 million square feet (sf) of rentable area. Located in the heart of Manhattan’s Midtown district—on Sixth Avenue between West 54th and West 55th Streets—the building sits in one of the most vibrant and sought-after commercial corridors in the country. Its strategic positioning places it within walking distance of Central Park, Rockefeller Center, and numerous transportation hubs.
As of June 2025, occupancy at the property stood at 92.1%, reflecting a strong tenant base and leasing performance in an office market still adapting to post-pandemic demand dynamics. The property is home to more than 25 tenants, including several prominent names in the legal, financial, and infrastructure sectors.
The top five tenants by base rent are as follows:
- Paul Weiss: A leading law firm, accounting for 42.6% of the building’s base rent.
- Allianz: The global insurance and asset management giant, contributing 12.6%.
- Intercontinental Exchange (ICE): A key operator in financial markets, making up 6.3%.
- Fortress: An investment management firm, representing 5.7%.
- Global Infrastructure Partners: A major infrastructure investment firm, accounting for 4.7%.
Collectively, these five anchor tenants contribute 71.9% of the total base rent and occupy 63.2% of the building’s rentable area. The heavy concentration among a few financially stable and high-profile tenants adds a degree of cash flow reliability but also introduces potential exposure should any of these firms reduce their footprint or terminate their leases early.
KBRA‘s Analytical Approach
In assigning the preliminary ratings to the transaction, KBRA conducted a comprehensive credit analysis utilizing multiple methodologies and proprietary models designed for CMBS single-borrower securitizations. The analysis began with a deep dive into the property’s current and projected cash flows, using KBRA’s North American CMBS Property Evaluation Methodology. This methodology considers key performance metrics such as in-place rents, occupancy levels, lease rollover schedules, market comparables, and historical operating performance.
The agency also applied its North American CMBS Single Borrower & Large Loan Rating Methodology to assess deal structure, loan terms, sponsor quality, and macroeconomic risks.
For this transaction, KBRA calculated a net cash flow (KNCF) of approximately $80.7 million. This figure represents a significant 24.7% discount from the issuer’s own underwritten net cash flow, reflecting KBRA’s more conservative assumptions around rent roll, operating expenses, and tenant durability.
Additionally, KBRA determined a KBRA value of the property at $1.0 billion, which is 48.3% lower than the appraiser’s valuation. This sizable discount stems from adjustments for market rent volatility, lease rollover risk, and uncertainties regarding the long-term outlook of the Manhattan office sector.
Based on this valuation and the loan amount, the KBRA Loan-to-Value (KLTV) ratio for the in-trust portion stands at 84.3%, indicating moderate leverage relative to KBRA’s conservatively adjusted asset value.
Third-Party Reports and On-Site Review
KBRA’s analysis incorporated multiple third-party sources, including engineering, environmental, and appraisal reports. These documents provided critical insights into the property’s physical condition, compliance with environmental regulations, and external appraised value. Furthermore, KBRA analysts conducted an in-person site inspection to assess the building’s current state, maintenance quality, location advantages, and surrounding market activity.
Legal documents were also reviewed to identify any encumbrances, lease restrictions, or structural issues that could impair the collateral’s value or the enforceability of the loan.
Rating Methodologies Applied
In addition to the two primary CMBS methodologies, KBRA utilized the following frameworks in its assessment:
- Global Structured Finance Counterparty Methodology: To evaluate the counterparty risks associated with servicing, trusteeship, and other critical transactional roles.
- Methodology for Rating Interest-Only Certificates in CMBS Transactions: Given the structure includes interest-only bond classes.
- ESG Global Rating Methodology: Environmental, social, and governance factors were also assessed to the extent they were material to credit risk.
Disclosure and Further Information
For stakeholders seeking deeper insight into the ratings rationale, KBRA has published a full transaction report. This document includes a detailed breakdown of the underlying analysis, assumptions, and sensitivities that could impact the assigned ratings.
Further information on the methodologies used, including material models, rating category definitions, and disclosure forms, is available on KBRA’s official website at www.kbra.com. These documents explain how various stress scenarios, market trends, and borrower-specific factors were considered in the rating decision.
KBRA also provides information on how ESG factors may have influenced the outcome. While not always a primary driver, environmental compliance, tenant ESG policies, and the property’s energy efficiency can impact risk evaluations in large urban assets.
