KBRA Assigns Ratings to HLTN 2024-DPLO
6 Jun 2024 | New York
KBRA announces the assignment of ratings to seven classes of HLTN 2024-DPLO, a CMBS single-borrower securitization.
The collateral for the transaction is a $452.0 million non-recourse, first lien mortgage loan that was co-originated by Citi Real Estate Funding Inc. and German American Capital Corporation. The floating rate loan has a two-year initial term with three 12-month extension options and requires monthly interest-only payments. The mortgage loan is secured by the borrower’s fee simple interest in The Diplomat Beach Resort located in Hollywood, Florida. The subject property features 1,000 keys, eight food & beverage outlets, approximately 128,300 sf of indoor meeting and event space, an outdoor pool and infinity pool, a kids splash zone, a full-service spa, a fitness facility, and business center. The hotel was constructed in 2002. Between 2015 and 2018, the property underwent an $89.6 million renovation, which included upgrades to the guestrooms, meeting space and the addition of several food & beverage outlets. The sponsors plan to invest approximately $36.1 million on a brand-mandated property improvement plan to convert the property to a Signia by Hilton. For the TTM 4/2024 period, the subject property achieved an occupancy of 70.6% with an ADR of $324.11, resulting in a revenue per available room (PAR) of $228.73. As of the TTM 2/2024 period, the property achieved occupancy, ADR and RevPAR penetration rates of 107.1%, 77.6% and 83.1%, 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, 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 subject of approximately $42.8 million, which is 8.6% below the issuer’s NCF, and a KBRA value of approximately $439.4 million, which is 52.7% below the appraiser’s as-is value. The resulting in-trust KBRA Loan to Value (KLTV) is 102.9%. 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.
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