KBRA Assigns Preliminary Ratings to BRES 2025-ATCAP CMBS Transaction Backed by $380 Million Industrial Portfolio
Kroll Bond Rating Agency, LLC (KBRA) has announced that it has assigned preliminary ratings to six classes of notes issued under BRES 2025-ATCAP, a single-borrower commercial mortgage-backed securities (CMBS) transaction. The securitization is backed by a $380 million floating-rate, interest-only mortgage loan secured by a diverse portfolio of industrial properties spanning five U.S. states. The transaction underscores the continued investor appetite for industrial assets, which remain among the strongest-performing property types in the commercial real estate market.
Overview of the Transaction
The BRES 2025-ATCAP securitization is structured around a single, large mortgage loan originated to finance a 30-property industrial portfolio and one excess land parcel. The loan has an initial two-year term with the option for three one-year extensions, allowing the borrower to extend the maturity up to five years, subject to certain performance and structural conditions. Throughout its term, the loan will remain interest-only, requiring no principal amortization.
The transaction’s collateral encompasses approximately 4.5 million square feet of industrial space, diversified across multiple markets and tenant bases. The geographic distribution of the portfolio is as follows:
- Texas: 57.0%
- Oklahoma: 17.0%
- Colorado: 15.5%
- Florida: 5.3%
- Missouri: 5.2%
As of June 2025, the portfolio was 91.2% leased to more than 190 unique tenants, reflecting a high level of occupancy and tenant diversification. This occupancy rate provides a solid income base, mitigating risks associated with tenant concentration or regional economic fluctuations.
The borrower’s fee simple interest in the assets provides additional structural security, granting clear ownership of the underlying properties. The portfolio’s composition across key Sunbelt and Midwestern states also positions it well in markets benefiting from logistics growth, e-commerce expansion, and sustained demand for warehouse and distribution space.
KBRA’s Analytical Approach
In determining preliminary ratings for the six classes of BRES 2025-ATCAP, KBRA conducted a comprehensive review under multiple established methodologies. The agency applied its North American CMBS Property Evaluation Methodology and the North American CMBS Single Borrower & Large Loan Rating Methodology, which together form the core analytical framework for single-asset and large-loan CMBS ratings.
Through this process, KBRA performed an independent analysis of the portfolio’s cash flow, property-level performance, and valuation metrics. Additionally, the agency incorporated inputs from its Global Structured Finance Counterparty Methodology to assess exposure to counterparties involved in the transaction—such as servicers, trustees, and other transaction participants.
Furthermore, environmental, social, and governance (ESG) considerations were integrated through KBRA’s ESG Global Rating Methodology, ensuring that potential sustainability or governance-related risks were factored into the overall rating determination. ESG factors, while not necessarily a primary driver of the rating, are evaluated to capture potential long-term impacts on asset performance or market perception.
Detailed Financial and Valuation Results
As part of its independent review, KBRA derived a KBRA Net Cash Flow (KNCF) for the portfolio of approximately $26.4 million, representing a 9.0% haircut from the issuer’s reported net cash flow. This adjustment reflects KBRA’s conservative approach to income forecasting, which typically accounts for potential volatility in rental income, expenses, and re-leasing assumptions.
On the valuation side, KBRA’s analysis produced a KBRA Value (KValue) of $334.6 million, which is 41.1% below the appraiser’s “as-is” market value. Such valuation reductions are typical in CMBS rating processes, as rating agencies incorporate stressed assumptions to evaluate the asset’s ability to sustain cash flow under potential adverse market conditions.
Based on these metrics, KBRA calculated an in-trust KBRA Loan-to-Value (KLTV) ratio of 113.6%, indicating that the outstanding loan balance exceeds KBRA’s derived stressed value of the collateral. While this figure is relatively high, it is not uncommon for floating-rate, interest-only industrial portfolios, particularly those with shorter initial terms and extension options. The rating agency’s analysis also reflects the strong leasing performance, tenant diversity, and market positioning of the underlying assets—all of which help balance leverage concerns.
Property and Market Considerations
The industrial sector has remained one of the most resilient segments of commercial real estate, driven by structural shifts toward e-commerce, nearshoring, and distribution logistics. The BRES 2025-ATCAP portfolio benefits from exposure to these themes, particularly in Texas, where demand for industrial space has surged due to population growth, infrastructure investment, and the state’s strategic location for supply chain operations.
Oklahoma and Colorado provide additional regional diversification, offering access to central and mountain corridor distribution networks, while Florida and Missouri add exposure to key consumer and manufacturing markets. The properties’ average occupancy above 90% reflects strong market demand and effective asset management practices.
Many of the portfolio’s tenants are small to mid-sized businesses involved in logistics, manufacturing, and light industrial operations, providing a stable and recurring income stream. The geographic and tenant diversification reduces single-market exposure and mitigates the potential impact of individual tenant defaults.
Third-Party and On-Site Due Diligence
As part of its credit assessment, KBRA also reviewed third-party engineering, environmental, and appraisal reports commissioned for the transaction. These reports provided independent verification of property conditions, environmental compliance, and market valuations.
Additionally, KBRA conducted its own site inspection of the portfolio to assess physical quality, maintenance levels, and market competitiveness. The agency also reviewed legal documentation related to the mortgage loan and securitization structure to ensure compliance with CMBS standards and to identify any structural features that might affect credit risk.
Such due diligence helps validate the accuracy of the issuer’s representations and ensures that potential environmental or structural deficiencies are identified and appropriately considered in the final rating decision.
Ratings Rationale and Methodological Framework
The six classes of certificates issued under the BRES 2025-ATCAP transaction were rated based on their respective credit enhancement levels, structural features, and projected loss coverage under various stress scenarios. Higher-rated tranches are expected to benefit from greater subordination, meaning lower exposure to potential portfolio losses.
KBRA’s methodology considers a range of factors including:
- Historical and projected portfolio performance
- Market rent trends and vacancy rates
- Tenant diversification and credit quality
- Property-level expense ratios
- Re-leasing and rollover risk
- Loan structure and extension provisions
- Counterparty strength and servicing quality
Each of these components feeds into a holistic risk model that assigns appropriate credit ratings reflective of expected loss outcomes and investor protection levels.
Access to Rating Documents and Reports
Investors and stakeholders can access the detailed rating rationale, transaction documents, and sensitivity analyses through KBRA’s website. The full rating report provides deeper insights into key credit considerations, potential rating drivers, and the factors that could lead to future upgrades or downgrades.
The report also discloses sensitivity analyses outlining how varying assumptions—such as changes in market rent, occupancy, or capitalization rates—could affect cash flows and rating outcomes. This transparency allows investors to better understand the risk dynamics within the transaction.
Additional disclosures are available in the Information Disclosure Form(s) linked to the transaction, which detail the methodologies, data sources, and analytical assumptions used in determining the preliminary ratings.
Methodologies Referenced in the Rating
The following KBRA methodologies were applied in the rating process:
- CMBS: North American CMBS Property Evaluation Methodology
– Used to determine stabilized cash flows and property-level performance metrics. - CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
– Provides guidance for analyzing large, single-loan securitizations and assessing loan structure risk. - Structured Finance: Global Structured Finance Counterparty Methodology
– Evaluates risks associated with transaction counterparties such as servicers and trustees. - ESG Global Rating Methodology
– Integrates environmental, social, and governance factors that could influence asset performance or long-term credit quality.
These methodologies, together, form the foundation for KBRA’s holistic evaluation of structured credit transactions like BRES 2025-ATCAP.
Transparency and Disclosure Standards
KBRA emphasizes transparency in its rating process. The agency provides detailed Information Disclosure Forms that outline:
- Key sources of information used in preparing the credit rating
- Sensitivity analyses and model assumptions
- Definitions and scales for each rating category
- Disclosures of potential conflicts or limitations of data
Investors can also access KBRA’s broader policies, methodologies, and rating scales directly at
The agency’s commitment to detailed disclosure ensures that market participants can independently evaluate the reasoning and analytical rigor behind each rating decision.
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.
