KBRA Assigns Ratings to DC Trust 2024-HLTN
4 Apr 2024 | New York
KBRA is pleased to announce the assignment of ratings to eight classes of DC Trust 2024-HLTN, a CMBS single-borrower securitization. The collateral for the transaction is a $229.7 million non-recourse, first lien mortgage loan originated by Morgan Stanley. The fixed rate loan has a four-year term and requires monthly interest-only payments that will be based on a coupon of 7.775%. The mortgage loan will be secured by the borrower’s fee simple interest in the Washington Hilton, a 1,107-key full-service hotel located in Washington, DC, in the Dupont Circle neighborhood. The property was developed by the Hilton Hotels Corporation and opened in 1965. The hotel features three restaurants, a grab and go café/market, 117,440 sf of meeting and event space, a fitness center with yoga studio, an outdoor swimming pool with kids’ pool, cabana and seasonal pool bar, a business center with FedEx Office, car rental desk, and gift shop. Since acquisition in 2016, the sponsors have invested approximately $27.3 million ($24,640 per key) on capital improvements including renovations to the lobby, guestrooms, corridors, and public spaces. For the TTM 2/2024 period, the subject property achieved an occupancy of 69.0% with an ADR of $224.64, resulting in a revenue per available room (RevPAR) of $155.08. As of year-end 2023, the property achieved occupancy, ADR, and RevPAR penetration rates of 106.8%, 99.4% and 106.2%, 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 subject of approximately $24.1 million, which is 8.4% below the issuer’s NCF, and a KBRA value of approximately $246.8 million, which is 39.8% below the appraiser’s as-is value. The resulting in-trust KBRA Loan to Value (KLTV) is 93.1%. 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.
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