KBRA Assigns Preliminary Ratings to SDR 2024-DSNY
15 Apr 2024 | New York
KBRA announces the assignment of preliminary ratings to five classes of SDR 2024-DSNY, a CMBS single-borrower securitization.
The collateral for the transaction is a $735.0 million non-recourse, first lien mortgage loan comprised of two loans that are expected to be co-originated by Wells Fargo Bank, National Association, Bank of America, N.A. and Goldman Sachs Bank USA. The floating rate loans are expected to have a two-year initial term with three 12-month extension options and require monthly interest-only payments. The mortgage loans will be secured by the borrowers’ leasehold interests in three adjacent full-service hotels, the Walt Disney World Dolphin, Walt Disney World Swan and Walt Disney World Swan Reserve, located in the Epcot Resort area of Walt Disney World in Lake Buena Vista, Florida. The portfolio features 294,000 sf of indoor meeting space, 18 food & beverage outlets, multiple outdoor pools, a full-service spa, three fitness centers, two business centers, retail outlets, basketball and sand volleyball courts, an on-site Disney Planning Center, a private beach and complimentary theme park shuttle service as well as water transport to Epcot and Hollywood Studios. Including the construction cost of the Swan Reserve of $196.9 million, the sponsors have invested approximately $455.8 million on capital improvements over the last 10 years. For the TTM 2/2024 period, the portfolio achieved an occupancy of 83.4% with an ADR of $270.28, resulting in a revenue per available room (RevPAR) of $225.27. As of TTM 1/2024, the portfolio achieved occupancy, ADR, and RevPAR penetration rates of 115.9%, 121.5% and 140.1%, respectively.
KBRA’s analysis of the transaction included a detailed evaluation of the property’s cash flows using our U.S. CMBS Property Evaluation Methodology, and the application of our U.S. CMBS Single Borrower & Large Loan Rating Methodology. In addition, KBRA also relied on its Global Structured Finance Counterparty Methodology for assessing counterparty risk in this transaction, its Methodology for Rating Interest-Only Certificates in CMBS Transactions, and its ESG Global Rating Methodology, to the extent deemed applicable.
The results of our analysis yielded a KBRA net cash flow (KNCF) for the portfolio of approximately $106.5 million, which is 7.1% below the issuer’s NCF, and a KBRA value of approximately $1.17 billion, which is 24.9% below the aggregate of the appraiser’s as-is values. The resulting in-trust KBRA Loan to Value (KLTV) is 62.8%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental, and appraisal reports, the results of our site inspection of the property, and legal documentation review.
To access rating and relevant documents, click here.
Click here to view the report.