Correction: Fitch to Rate WABR 2016-BOCA Commercial Mortgage P-T Ctfs; Presale Issued

NEW YORK--()--(This is a correction to the release published July 5, 2016. It includes Fitch's 'Exposure Draft: Counterparty Criteria for Structured Finance and Covered Bonds - Effective from April 14, 2016 to July 18, 2016' and 'Rating Criteria for U.S. Commercial Mortgage Servicers', which were omitted from the original release.)

Fitch Ratings has issued a presale report on Waldorf Astoria Boca Raton Trust 2016-BOCA (WABR 2016-BOCA) commercial mortgage pass-through certificates series 2016-BOCA.

Fitch expects to rate the transaction and assign Rating Outlooks as follows:

--$145,100,000 class A 'AAAsf'; Outlook Stable;

--$275,000,000a class X-CP 'BBB-sf'; Outlook Stable;

--$275,000,000a class X-NCP 'BBB-sf'; Outlook Stable;

--$50,500,000 class B 'AA-sf'; Outlook Stable;

--$37,400,000 class C 'A-sf'; Outlook Stable;

--$42,000,000 class D 'BBB-sf'; Outlook Stable;

--$80,000,000 class E 'BB-sf'; Outlook Stable;

--$75,000,000 class F 'B-sf'; Outlook Stable.

(a) Notional amount and interest-only.

The expected ratings are based on information provided by the issuer as of June 15, 2016.

The certificates represent the beneficial interest in a trust that holds a two-year, floating-rate, interest-only $430 million mortgage loan secured by the fee and leasehold interests in the 1,047-room Waldorf Astoria Boca Raton Resort & Club. The loan is sponsored by the Blackstone Group, L.P. (Blackstone). The loan was co-originated by JPMorgan Chase Bank, National Association (rated 'A+'/'F1+'/Stable Outlook) and Goldman Sachs Mortgage Company (rated 'A'/'F1'/Stable Outlook).

KEY RATING DRIVERS

High Leverage on Full Debt Stack: The total debt package includes mezzanine financing in the amount of $285 million that is not included in the trust. Fitch's stressed debt service coverage ratio (DSCR) and loan to value (LTV) for the full debt stack are 0.66x and 165.5%, respectively. Fitch's DSCR and LTV for the trust component of the debt are 1.10x and 99.5%.

Asset Quality: Fitch assigned the Waldorf Astoria Boca Raton Resort and Club a property quality grade of A-'. The collateral has both lakefront (Lake Boca Raton) and oceanfront (Atlantic Ocean) land. Property amenities include: a full-service spa, three fitness centers, 30 tennis courts, 16 food and beverage (F&B) outlets, two 18-hole golf courses, seven swimming pools including a FlowRider wave simulator, a 32-slip marina and approximately 200,000 square feet of indoor and outdoor meeting space.

Significant Capital Invested by Sponsor: The sponsor acquired the property in 2004 and has invested $274.2 million ($261,886/key) since acquisition. Completed renovations include: complete room renovations at the Cloister, the Tower, and the Bungalows; construction of the Boca Beach Club; upgrades to the Yacht Club rooms; lobby modernization; F&B outlet improvements; and updating the meeting facilities.

Non-traditional Hotel Income: For the trailing 12-month (TTM) period ended April 2016, approximately $64.1 million of non-room and non-F&B revenue was generated by the property, representing 29.6% of the property's total revenues. Ancillary revenue sources include golf, spa, tennis, beach, marina and club fees.

RATING SENSITIVITIES

Fitch found that the 'AAAsf' class could withstand an approximate 72.8% decrease to the most recent actual net cash flow (NCF) prior to experiencing $1 of loss to the 'AAAsf' rated class. Fitch performed several stress scenarios in which the Fitch NCF was stressed. Fitch determined that a 63.2% reduction in Fitch's implied NCF would cause the notes to break even at a 1x debt service coverage ratio (DSCR), based on the actual debt service.

Fitch evaluated the sensitivity of the ratings for class A and found that a 21% decline in Fitch's implied NCF would result in a one-category downgrade, while a 47% decline would result in a downgrade to below investment grade.

The Rating Sensitivity section in the presale report includes a detailed explanation of additional stresses and sensitivities. Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report. The presale report is available to all investors on Fitch's web site 'www.fitchratings.com' or by clicking on the link.

DUE DILIGENCE USAGE

Fitch was provided with third-party due diligence information from Ernst and Young, LLP. The third-party due diligence information was provided on ABS Due Diligence Form-15E and focused on a comparison and re-computation of certain characteristics with respect to the mortgage loan and related mortgaged properties in the data file. Fitch considered this information in its analysis, and the findings did not have an impact on our analysis.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions: Effective 8/27/2015 to 8/18/2016 (pub. 27 Aug 2015)

https://www.fitchratings.com/site/re/870009

Exposure Draft: Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 Apr 2016)

https://www.fitchratings.com/site/re/878412

Global Structured Finance Rating Criteria - Effective from 6 July 2015 to 27 June 2016 (pub. 06 Jul 2015)

https://www.fitchratings.com/site/re/867952

Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)

https://www.fitchratings.com/site/re/735382

Related Research

Waldorf Astoria Boca Raton Trust 2016-BOCA -- Appendix

https://www.fitchratings.com/site/re/883325

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1012827

ABS Due Diligence Form 15E 1

https://www.fitchratings.com/creditdesk/press_releases/content/ridf15E_frame.cfm?pr_id=1012827&flm_nm=15e_1012827_1.pdf

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1012827

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings, Inc.
Primary Analyst
Peter Simon
Director
+1 212-908-9166
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Robert Ritter
Associate Director
+1 212-908-0328
or
Committee Chairperson
Eric Rothfeld
Managing Director
+1 212-908-0761
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings, Inc.
Primary Analyst
Peter Simon
Director
+1 212-908-9166
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Robert Ritter
Associate Director
+1 212-908-0328
or
Committee Chairperson
Eric Rothfeld
Managing Director
+1 212-908-0761
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com