KBRA Assigns Preliminary Ratings to Hilton Orlando Trust 2018-ORL

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Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to ten classes of Hilton Orlando Trust 2018-ORL, a $475.0 million CMBS single-asset, single-borrower transaction.

The collateral for the transaction consists of a $475.0 million non-recourse, first lien mortgage loan. The floating rate loan has an initial two-year term with five, one-year extension options and requires monthly interest-only payments based on one-month LIBOR plus a spread of 2.05%. The loan is secured by the borrower’s fee simple interest in the Hilton Orlando, a 1,417-key, 19-story full-service hotel located along International Drive, across the street from, and connected via a pedestrian sky bridge to, the Orange County Convention Center in Orlando, Florida. The hotel opened in September 2009 and the sponsors have spent an additional $27.5 million ($19,399 per key) on capital improvements since 2011.

KBRA’s analysis of the transaction included a detailed evaluation of the property’s cash flow using our CMBS Property Evaluation Methodology, and the application of our CMBS Single Borrower and Large Loan Rating Methodology. The results of our analysis yielded a KBRA net cash flow (KNCF) for the portfolio of $51.6 million. We applied a capitalization rate of 10.50% and arrived at a KBRA value of $491.4 million and a KBRA Loan to Value (KLTV) of 96.7%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental and appraisal reports; management agreement; STR reports; the results of our site inspection; and legal documentation.

For further details on KBRA’s analysis, please see our pre-sale report, Hilton Orlando Trust 2018-ORL, 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 ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: Hilton Orlando Trust 2018-ORL

      Class       Expected KBRA Rating       Balance (US$)    
      A       AAA(sf)       $162,100,000    
      X-CP*       AAA(sf)       $296,000,000    
      C-EXT*       AAA(sf)       $296,000,000    
      B       AA-(sf)       $51,600,000    
      C       A-(sf)       $38,300,000    
      D       BBB-(sf)       $44,000,000    
      E       BB-(sf)       $82,300,000    
      F       B-(sf)       $49,200,000    
      G       B-(sf)       $23,500,000    
      HRR**       NR       $24,000,000    
      R       NR       N/A    

*Notational balance
**To satisfy the US risk retention rules, BSREF Holdings LLC, a third-party purchaser, will purchase and retain an “eligible horizontal residual interest” consisting of the Class HRR certificates, representing at least 5.0% of the fair value of all non-residual interests issued, determined in accordance with GAAP.

Representations & Warranties 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 available Hilton Orlando Trust 2018-ORL Representations & Warranties Disclosure.

Related Publications: (available at www.kbra.com)


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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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Business Wire: 15:43 GMT Tuesday 13th February 2018

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