Fitch Upgrades Motel 6 Trust 2012-MTL6

NEW YORK--()--Fitch Ratings has upgraded six and affirmed four classes of Motel 6 Trust 2012-MTL6 commercial mortgage pass-through certificates series 2012-MTL6 (Motel 6 Trust 2012-MTL6). A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The transaction is primarily secured by 497 economy hotels operated mainly under the Motel 6 brand. The upgrades reflect the improved performance of the hotel portfolio since issuance. As of trailing 12-months (TTM) August 2014, the Fitch adjusted debt service coverage ratio (DSCR) for the trust component was 1.88 times (x), compared with 1.67x at the last rating action and 1.55x at issuance.

The portfolio remains geographically diverse with properties located across 47 states and one Canadian province. The largest state concentration remains California with approximately one third of the collateral. The collateral also includes 100% of the direct equity interests in the sponsor subsidiary that holds nearly 500 franchise agreements. As of TTM August 2014, franchise EBIDTA had increased by approximately 12.5% from TTM August 2013 and 42% from TTM August 2012.

Since origination, there have been 20 releases; portfolio collateral now consists of 497 hotels, approximately 62 of which are ground lease interests. Total pay down of $23.7 million (2.3%) has occurred from the property releases.

As part of its review, Fitch analyzed TTM August 2014 property and franchise level operating statements provided by the Servicer. For TTM August 2014, portfolio occupancy, average daily rate (ADR), and revenue per available room (RevPAR) were reported at 66.3%, $49.09, and $32.56, respectively. These metrics are up from the TTM August 2013 figures of 64.7%, $45.95, and $29.75 and TTM August 2012 figures of 63.6%, $45.85, and $29.17, respectively. The Fitch adjusted DSCR was calculated based on a Fitch adjusted NCF (reflective of an additional credit loss on the leasehold properties and a 5% FF&E deduction) and a stressed debt service amount calculated using an 11.33% refinance constant.

RATING SENSITIVITIES

The Rating Outlook for all classes remains Stable. For additional sensitivity analysis, please see Fitch's new issue report titled, 'Motel 6 Trust 2012-MTL6, Series 2012-MTL6', dated Dec. 5, 2012.

Fitch has upgraded the following classes:

--$540.5 million* class XB-1 to 'BBBsf' from 'BB+sf'; Outlook Stable;

--$540.5 million* class XB-2 to 'BBBsf' from 'BB+sf'; Outlook Stable;

--$189.9 million class B to 'AA+sf' from 'AA-sf'; Outlook Stable;

--$145.1 million class C to 'AA-sf' from 'A-sf'; Outlook Stable;

--$185,500,000 class D to 'BBBsf' from 'BBB-sf'; Outlook Stable;

--$20,000,000 class E to 'BBBsf' from 'BB+sf'; Outlook Stable.

Fitch has affirmed the following classes:

--$81.3 million class A-1 at 'AAAsf'; Outlook Stable;

--$404.5 million class A-2 at 'AAAsf'; Outlook Stable;

--$404.5 million* class XA-1 at 'AAAsf'; Outlook Stable;

--$485.8* class XA-2 at 'AAAsf'; Outlook Stable.

*Notional amount and interest only.

Additional information on Fitch's criteria for analyzing large loans within a single borrower U.S. CMBS transaction is available in the Sept. 19, 2014 report, 'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions', which is available at 'www.fitchratings.com'.

A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following report:

-- Motel 6 Trust 2012-MTL6 Appendix (Dec. 5, 2012).

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);

--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transaction' (Sept. 19, 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=772328

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=910654

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Contacts

Fitch Ratings
Primary Analyst
Stacey McGovern, +1 212-908-0722
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations, New York
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Stacey McGovern, +1 212-908-0722
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations, New York
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com