KBRA Assigns Preliminary Ratings to Neighborly Issuer LLC Series 2022-1 Senior Secured Notes

KBRA assigns preliminary ratings to two note classes of Neighborly Issuer LLC Series 2022-1, (the “Issuer”) a whole business securitization.

This transaction is the second whole business securitization (WBS) issued by Neighborly Issuer LLC (“Neighborly” or the “Company”). In connection with its first securitization transaction in March 2021, Neighborly Company and certain of its affiliates contributed substantially all of their domestic revenue-generating assets to Neighborly Issuer LLC (the “Issuer”) and its subsidiaries. The Issuer is expected to issue two class of notes totaling $414 million (the “Series 2022-1 Notes”, and together with the Issuer’s Series 2021-1 Notes, the “Notes”). The transaction collateral includes existing and future domestic franchise agreements and development agreements, royalties on company-operated locations, third party vendor rebates and product margin, license agreements, other franchise fees and intellectual property. The proceeds from the offered Notes will be used to fund various transaction accounts (and may be used to fund the Series 2022-1 Pre-Funding Account), pay certain transaction fees and expenses, and for general corporate purposes. The Issuer may elect to acquire the Specified Assets discussed below on the closing date, in which case there will be no deposit to the Series 2022-1 Pre-Funding Account.

Founded in 1981, Neighborly is one of the largest providers and franchisors of do-it-for-me (“DIFM”) household services in the United States. Neighborly operates 25 service brands with a focus on repairing, maintaining, and enhancing consumers’ homes and properties, offering services in over 3,650 active territories across all 50 states and the District of Columbia and nine countries including the US, as of August 31, 2021. System-wide sales totaled approximately $3.0 billion for the twelve months ending August 31, 2021 (“LTM August 2021”) and the system is approximately 99% franchised.

In conjunction with the issuance of the Series 2022-1 Notes, KBRA anticipates affirming the ratings on the Master Issuer’s outstanding Series 2021-1 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.

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Related Publications

• Whole Business Securitization ABS Global Rating Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

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.

About KBRA

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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