KBRA Affirms All Ratings For BX Trust 2019-OC11

KBRA affirms all ratings for BX Trust 2019-OC11, a CMBS SASB transaction. The affirmations follow a surveillance review of the transaction, which shows a modest increase in KNCF and KBRA value since our last rating actions in 2023. The changes in KNCF and value do not warrant further rating adjustments at this time. KBRA also considered the quality and location of the collateral property and the experience of the loan sponsor and hotel operator.

The transaction collateral is a $1.91 billion portion of a $3.01 billion non-recourse, first-lien mortgage loan that is secured by the borrower’s fee simple and leasehold interests in the Bellagio Las Vegas, a full-service hotel and casino located on 77 acres of prime property along the Strip in Las Vegas. The hotel and casino are operated by Bellagio LLC, a wholly owned subsidiary of MGM Resorts International (NYSE: MGM) under a master lease (Bellagio Lease). The loan is also secured by the borrower’s interest in the Bellagio Lease and the other Bellagio Lease documents. The whole loan has an outstanding balance of $3.01 billion ($765,319 per key) as of November 2024. The loan sponsors are BREIT Operating Partnership L.P.—a Blackstone-related entity—and MGM Resorts International (MGM). Blackstone in October 2023 sold a $300 million stake (21.9%) in the Bellagio Las Vegas to Realty Income as part of a joint venture. The sale also included a $650 million preferred equity investment by the purchasing party.

KBRA analyzed the cash flow for the property utilizing information obtained from the trustee and servicer to determine KNCF. Because the transaction is structured with a master lease, KBRA used a bifurcated analysis that involved a look-through to the cash flow and value from the property’s operations, and an analysis of the cash flow derived solely from the master lease payments. The analysis produced a KNCF of $602.5 million and a KBRA value of $5.59 billion. The resulting whole loan KLTV is 53.8%, compared with 58.6% at last review and 77.5% at securitization. KBRA maintains its KPO of Outperform based on the improvement in KNCF since securitization.

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