Kroll Bond Rating Agency Assigns Preliminary Ratings to Welk Resorts 2017-A

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes issued by Welk Resorts 2017-A (“WELK 2017-A”). This is a $149.03 million timeshare ABS transaction that is expected to close June 22, 2017.

Welk 2017-A is expected to be collateralized by approximately $125 million of timeshare loan receivables at closing compared to an expected collateral balance of approximately $155 million after completion of the prefunding period. The prefunding feature allows up to $30 million (19.32%) of the collateral pool to be funded until 150 days after the closing date.

Welk Resorts 2017-A, LLC will issue two classes of notes totaling $149.03 million. The Class A notes and the Class B Notes have a preliminary rating of A (sf) and BBB (sf), respectively. The notes are collateralized by the vacation ownership interests (“VOI”) purchased through the timeshare loans. Credit enhancement for the Notes is comprised of 4.00% initial overcollateralization (subject to a 0.50% floor), subordination of junior note classes (18.00% in the case of the Class A notes), a 2.50% general reserve account (which can step down to 1.00% after month 12) and excess spread. The transaction has initial hard credit enhancement levels of 24.50% for the Class A notes and 6.50% for the Class B notes. This transaction is Welk Resort Group Inc.’s (“Welk” or the “Company”) third timeshare loan-backed securitization.

Welk is a leading international hospitality and vacation ownership interest company with its corporate office in San Marcos, California. The Company was founded by the late Lawrence Welk, the famous band leader and television celebrity, has been in the timeshare business since 1984 and has operated resorts since 1964. Welk has an experienced management team with a diverse experience in the hospitality industry.

KBRA applied its U.S. Timeshare ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Welk’s historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA’s Pre-Sale Report, Welk Resorts 2017-A, which was published today at www.kbra.com.

Preliminary Ratings Assigned: Welk Resorts 2017-A

Class       Rating       Expected Initial Principal Balance
A       A (sf)       $121,090,000
B       BBB (sf)       $27,940,000

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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:
Kroll Bond Rating Agency
Eric Neglia, 646-731-2456
Senior Director
eneglia@kbra.com
or
Rosemary Kelley, 646-731-2337
Senior Managing Director
rkelley@kbra.com
or
Ed Pagano, 646-731-2449
Senior Analyst
epagano@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
Eric Neglia, 646-731-2456
Senior Director
eneglia@kbra.com
or
Rosemary Kelley, 646-731-2337
Senior Managing Director
rkelley@kbra.com
or
Ed Pagano, 646-731-2449
Senior Analyst
epagano@kbra.com