Kroll Bond Rating Agency Assigns Preliminary Ratings to BHMS 2014-ATLS

NEW YORK--()--Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to the BHMS 2014-ATLS transaction (see ratings list below). BHMS 2014-ATLS is a CMBS single borrower transaction that is collateralized by a $1.0 billion floating rate first mortgage loan that was co-originated by German American Capital Corporation (60%), Morgan Stanley Bank, N.A. (30%), and Citigroup Global Markets Realty Corp. (10%) on June 30, 2014. The mortgage loan has been divided into two components: a $650.0 million seven year fixed rate component and a $350.0 million floating rate component. The floating rate component has an initial three-year term with four one-year extension options. A third-party interest rate cap agreement is in place with SMBC Capital Markets, Inc. for the initial term of the floating rate portion. Should the floating rate portion be extended, a replacement interest rate cap agreement covering the extended loan term must be procured. Sumitomo Mitsui Banking Corporation, the credit support provider for SMBC Capital Markets, Inc. has a KBRA senior debt rating of “A” and a short term debt rating of “K1”.

The Atlantis Resort, a 2,917 key luxury resort located on Paradise Island, The Bahamas, on approximately 245 acres of prime oceanfront property. The Atlantis Resort is an iconic asset that is uniquely positioned among other resorts in the Caribbean due to the wide array of amenities and activities it offers in a single location, which include a 141-acre water park, dolphin and sea lion attractions, and marine habitat exhibits. The property also features 39 restaurants and bars, a 60,000 sf casino, 458,000 sf of meeting and conference space, 73,391 sf of retail and spa space, a fitness center, a kid’s club, three beaches, and a 63-slip Marina.

The property is situated on Paradise Island, which is adjacent to Nassau, the Bahamian capital. Paradise Island totals approximately 685-acres and provides over five miles of beach frontage. The subject resort is the predominant development on the island. The Bahamas are a popular destination for North American travelers. According to the Ministry of Tourism, the islands’ approximately 1.4 million overnight visitors in 2013 rank the Bahamas as the 4th largest Caribbean destination.

KBRA’s analysis of the transaction included a detailed evaluation of the resort’s cash flows using our CMBS Property Evaluation Guidelines, and the application of our CMBS Single Borrower & Large Loan Rating Methodology. The results of the analysis produced a KNCF for the property. A KBRA capitalization rate was then applied to the property’s KNCF to arrive at KBRA value. The analysis produced a KNCF and KBRA value for the property of $125.0 million and $1.22 billion, respectively. The resulting KLTV is 81.9%.

In our analysis of the transaction, we also reviewed and considered third party engineering, appraisal and environmental reports, as well as our own on-site inspections of the property and the competition.

For complete details on the analysis for each property, please see our Pre-Sale Report, entitled BHMS 2014-ATLS, 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 final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: BHMS 2014-ATLS

   
Class   Expected Rating   Balance (US$)
A-FX   AAA(sf)   $301,521,000
A-FL   AAA(sf)   $162,357,000
X-CPFX   AAA(sf)   $188,829,000*
X-CPFL   AAA(sf)   $101,236,000*
X-EXTFX   AAA (sf)   $188,829,000*
X-EXTFL   AAA (sf)   $101,236,000*
B-FX   AA-(sf)   $59,511,000
B-FL   AA-(sf)   $32,044,000
C-FX   A-(sf)   $40,018,000
C-FL   A-(sf)   $21,549,000
D-FX   BBB-(sf)   $67,758,000
D-FL   BBB-(sf)   $36,485,000
E-FX   BB-(sf)   $81,533,000
E-FL   BB-(sf)   $43,901,000
F-FX   B-(sf)   $99,659,000
F-FL   B-(sf)   $53,644,000

*Notional balance

 

17g-7 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 entitled BHMS 2014-ATLS 17g-7 Disclosure Report.

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

BHMS 2014-ATLS Pre-Sale Report 
BHMS 2014-ATLS 17g-7 Disclosure Report 
CMBS Property Evaluation Guidelines, published June 10, 2011 
CMBS Single Borrower & Large Loan Rating Methodology, published August 8, 2011

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical Contacts:
Kroll Bond Rating Agency, Inc.
Michael B. Brown, 646-731-2307
mbbrown@kbra.com
or
Robin Regan, 646-731-2358
rregan@kbra.com
or
Sacheen Shah, 646-731-2417
sshah@kbra.com
or
Josh Fischler, 646-731-2349
jfischler@kbra.com
or
Follow us on Twitter!
@KrollBondRating

Sharing

Contacts

Analytical Contacts:
Kroll Bond Rating Agency, Inc.
Michael B. Brown, 646-731-2307
mbbrown@kbra.com
or
Robin Regan, 646-731-2358
rregan@kbra.com
or
Sacheen Shah, 646-731-2417
sshah@kbra.com
or
Josh Fischler, 646-731-2349
jfischler@kbra.com
or
Follow us on Twitter!
@KrollBondRating