KBRA Assigns a Preliminary Rating to Servpro Master Issuer, LLC 2022-1 Senior Secured Notes
KBRA assigns a preliminary rating to one class of notes from Servpro Master Issuer, LLC Series 2022-1, a whole business securitization.
Servpro Industries, LLC completed its first securitization in October 2019. This transaction is structured as a "whole business securitization" in which Servpro Industries, LLC ("SERVPRO" or the "Company") and certain of its affiliates have contributed substantially all of their revenue-generating assets to Servpro Master Issuer, LLC (the "Issuer"). The Issuer is expected to issue $260 million Class A-2 Notes out of Series 2022-1. The transaction collateral includes existing and future franchise and development agreements, product supply contracts, call center payments, document restoration assets, vendor commissions, other franchisee fees and securitization information technology and intellectual property. The proceeds from the offered Notes will be used to fund certain transaction accounts and for general corporate purposes which may include a distribution to shareholders.
SERVPRO is the largest provider of property cleaning and restoration in the United States, focused primarily on restoring properties affected by water, fire, mold, and other damage. The Company's network includes 1,923 independently owned and operated franchises as of September 30, 2021 and serves customers across 50 states, the District of Columbia, and Canada. For the twelve months ending Sept. 30, 2021 ("LTM Q3 2021"), the system generated system sales of approximately $3.3 billion. The system is 100% franchised.
In conjunction with the issuance of the Series 2022-1 Notes, KBRA anticipates affirming the ratings on the Master Issuer's outstanding Series 2019-1 Class A-1 Notes and Class A-2 Notes, as well as the Series 2021-1 Class A-2 Notes (the "Existing Notes", and together with the Series 2022-1 Notes, the "Notes"). The ratings are consistent with the results of our cash flow scenarios following the addition of the Series 2022-1 Notes.
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency 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 pursuant to the Temporary Registration Regime. 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.
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