KBRA Assigns Preliminary Ratings to Atrium Hotel Portfolio Trust 2017-ATRM

NEW YORK--()--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to six classes of Atrium Hotel Portfolio Trust 2017-ATRM, a $600.0 million CMBS single-borrower transaction.

The collateral for the securitization consists of a $600.0 million non-recourse, first lien, floating-rate mortgage loan that is secured by the borrower’s fee simple interest in 26 hotels totaling 6,228 keys, the fee simple/leasehold interest in one hotel totaling 234 keys and the leasehold interest in two hotels totaling 553 keys. For the TTM 9/2017 period, the portfolio’s occupancy was 70.1% with an average daily rate (ADR) of $127.64, resulting in revenue per available room (RevPAR) of $89.46.

The underlying collateral properties consist of 25 full-service hotels (94.2%), two limited-service properties (3.0%), and two extended-stay properties (2.8%) located in 28 different MSAs in 16 states. All but one of the portfolio properties are operated under national flags including Embassy Suites by Hilton (10 properties, 44.7%), Marriott (five properties, 14.0%), Holiday Inn (four properties, 14.6%), Renaissance (two properties, 9.1%), Hilton (one property, 4.5%), Crowne Plaza (one hotel, 3.1%), Hampton Inn (two properties, 3.0%), Homewood Suites (two properties, 2.8%), and Sheraton (one property, 2.5%).

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows using our CMBS Property Evaluation Methodology, and the application of our CMBS Single Borrower and Large Loan Rating Methodology. The results of our analysis yielded a KBRA net cash flow (KNCF) for the portfolio of $74.0 million. To value the portfolio, KBRA applied a blended capitalization rate of 11.28% to arrive at a KBRA value of $656.3 million. The resulting KBRA Loan to Value (KLTV) is 91.4%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental and appraisal reports; management agreements; franchise agreements; STR reports; the results of our site inspections of 10 of the properties; and legal documentation review.

Preliminary Ratings Assigned: Atrium Hotel Portfolio Trust 2017-ATRM

   
Class   Expected KBRA Rating   Balance (US$)
A   AAA(sf)   $215,365,000
B   AA-(sf)   $56,335,000
C   A(sf)   $48,640,000
D   BBB(sf)   $52,535,000
E   BB(sf)   $82,745,000
F   B(sf)   $114,380,000
RR ABS Interest*   NR   $30,000,000
 

*To satisfy the US risk retention rules, the RR ABS Interest will constitute an “eligible vertical interest” representing 5.0% of all of the certificates and the RR ABS interest issued by the trust. Each of the originators are expected to retain a portion of the RR ABS Interest.

Representations & Warranties 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 available Atrium Hotel Portfolio Trust 2017-ATRM Representations & Warranties Disclosure.

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

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Laura Wolinsky, Director
(646) 731-2379
lwolinsky@kbra.com
or
Michael Brown, Senior Director
(646) 731-2307
mbbrown@kbra.com
or
Susannah Keagle, Senior Director
(646) 731-3357
skeagle@kbra.com
or
Griffin Flagg, Analyst
(646) 731-2433
gflagg@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Laura Wolinsky, Director
(646) 731-2379
lwolinsky@kbra.com
or
Michael Brown, Senior Director
(646) 731-2307
mbbrown@kbra.com
or
Susannah Keagle, Senior Director
(646) 731-3357
skeagle@kbra.com
or
Griffin Flagg, Analyst
(646) 731-2433
gflagg@kbra.com