NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to eight classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-LAQ, a $1.0 billion CMBS single-asset, single-borrower transaction.
The collateral for the securitization consists of a $1.0 billion non-recourse, first lien, floating-rate mortgage loan that is secured by the borrowers’ interests in 307 hotels including their fee simple interests in 295 lodging properties totaling 37,314 keys (94.6% of portfolio balance), and fee and leasehold or leasehold interests in 12 hotels totaling 1,841 keys (5.4%), as well as a pledge of cash flow from seven properties totaling 1,029 keys (0.0%). For the TTM 3/2018 period, the portfolio’s occupancy was 64.3% with an average daily rate (ADR) of $86.31, resulting in revenue per available room (RevPAR) of $55.49.
The underlying collateral consists of 309 (94.7% of loan balance) limited-service hotels while the remaining five are full-service, offering some food & beverage service. The portfolio hotels are located in 138 different MSAs in 41 states. All of the properties, except one, are operated under the La Quinta or the La Quinta Inn & Suites flags. The 132-key Chattanooga – Hamilton Place property (0.2%) is operated under the economy Baymont Inn & Suites flag, which is part of the Wyndham family of brands.
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 roundly $164.0 million. To value the portfolio, KBRA applied a blended capitalization rate of 11.65% to arrive at a KBRA value of $1.4 billion. The resulting KBRA Loan to Value (KLTV) is 73.5%. In our analysis of the transaction, we considered the third-party engineering, environmental, seismic, and appraisal reports; management and franchise agreements; the results of our site inspections; and legal documentation.
For further details on KBRA’s analysis, please see our pre-sale report, J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-LAQ, which was published today at www.kbra.com. The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of ratings that differ from the preliminary ratings.
Preliminary Ratings Assigned: J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-LAQ
|Class||Expected KBRA Rating||Balance (US$)|
* Notional balance
** To satisfy the US risk retention rules, 42-16 CLO HoldCo, LLC, an affiliate of Blackstone, is expected to retain an “eligible horizontal residual interest” consisting of the Class HRR certificates, which will represent at least 5.0% of the fair value of all interests issued on the closing date.
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 here.
Related Publications: (available at www.kbra.com)
- J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-LAQ Pre-Sale Report
- J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-LAQ Pre-Sale ReportCMBS Property Evaluation Methodology
- CMBS Single Borrower and Large Loan Rating Methodology
- Methodology for Rating Interest-Only Certificates in CMBS Transactions
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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.