Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to the Hyatt Hotel Portfolio Trust 2015-HYT transaction (see ratings list below). Hyatt Hotel Portfolio Trust 2015-HYT is a CMBS single borrower transaction that is collateralized by a $340.0 million floating rate loan that was originated by JPMorgan Chase Bank, National Association and an affiliate of Goldman Sachs Mortgage Company. The loan has an initial two year term with three, one-year extension options. Proceeds from the mortgage loan, along with $167.0 million of mezzanine financing, $117.7 million of cash equity and a $19.0 million letter of credit contributed by the loan sponsor, were used to facilitate the acquisition of a portfolio of 38 hospitality assets.
The loan is secured by the borrower's fee simple interests in 35 lodging properties totaling 4,530 keys, as well as the leasehold interest in three assets totaling 420 keys. Twenty-seven of the properties are select-service hotels operated under the Hyatt Place flag. These assets were built between 1990 and 2013, and range in size from 79 to 162 keys. The remaining 11 assets are extended-stay hotels operated under the Hyatt House flag. These assets were built between 1997 and 2010. All of the properties in the portfolio have been renovated since 2007, and a total of $41.0 million ($8,277 per key) has been spent on capital improvements across the portfolio from 2007 to 2014. Over 95% of the collateral properties by ALA are located in markets considered to be primary or secondary by KBRA. The primary market exposure (19.9%) includes two of the ten largest properties by ALA which equates to 9.4% of the portfolio balance. In addition, one of the portfolio’s five largest MSA concentrations is in a primary market, Boston (4.9%).
KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows using our CMBS Property Evaluation Guidelines, and the application of our CMBS Single Borrower & Large Loan Rating Methodology. For the purposes of our analysis, we determined KBRA net cash flow (KNCF) for each asset, and applied KBRA capitalization rates to each property’s KNCF to determine property value. KBRA adjusted this value to give partial credit in the amount of $30.0 million for a capital improvement reserve that was funded at origination. The weighted average variance to the issuer’s NCF was 2.4%, and the weighted average value variance to each property’s third party appraisal values was 34.0%. The analysis produced an aggregate KBRA value of $371.3 million and an in- trust KLTV of 91.6%.
For further details on KBRA’s analysis of the transaction, please see our Pre-Sale Report, entitled Hyatt Hotel Portfolio Trust 2015-HYT, which was published today at www.kbra.com.
The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.
Preliminary Ratings Assigned: Hyatt Hotel Portfolio Trust 2015-HYT
| Class | Expected Rating | Balance (US$) | ||||||
| A | AAA(sf) | $110,070,000 | ||||||
| X-CP | AAA(sf) | $289,000,000(1) | ||||||
| X-EXT | AAA(sf) | $340,000,000(1) | ||||||
| B | AA-(sf) | $40,130,000 | ||||||
| C | A-(sf) | $29,800,000 | ||||||
| D | BBB-(sf) | $43,000,000 | ||||||
| E | BB-(sf) | $62,100,000 | ||||||
| F | B-(sf) | $54,900,000 |
(1) Notional balance.
17g-7 Disclosure:
All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled Hyatt Hotel Portfolio Trust 2015-HYT 17g-7 Disclosure Report.
Related publications: (available at www.kbra.com)
CMBS Presale: Hyatt Hotel Portfolio Trust 2015-HYT
CMBS Property Evaluation Guidelines, published June 10, 2011
CMBS Single Borrower & Large Loan Rating Methodology, published February 23, 2012
About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
