KBRA Comments on Starz Mortgage Securities 2021-1 DAC Sellar Loan's Special Servicing Transfer

LONDON--(BUSINESS WIRE)--KBRA UK (KBRA) notes that Starz Mortgage Securities 2021-1 DAC's Sellar Loan transferred to the special servicer on 21 January 2025. Starz Mortgage Securities 2021-1 DAC is a static CRE CLO transaction, which was originally secured by six GBP and three EUR loans, of which only two GBP loans, with an aggregate balance of £50.2 million, remain. Currently, four of the eleven classes of the securitisation remain outstanding, with the other classes having been paid in full previously.

The Sellar Loan (£25.6 million, 50.9% of the remaining collateral balance) is the larger of the remaining loans in the transaction. The transfer to special servicing is due to a loan event of default resulting from the borrower's failure to pay all amounts due on the extended maturity date of 20 January 2025. Previously, the borrower was not able to pay all amounts due on the original maturity date (20 July 2024), and the loan's maturity date was extended by six months. Prior to that, the loan was amended on 12 June 2023 due to a breach of its DSCR covenant at the January 2023 IPD, with the DSCR covenant waived until the original maturity date.

The mortgage loan is collateralised by first priority liens on three full service hotels in the UK, two of which operate as Doubletree (Hilton affiliate) hotels and one of which operates as a Holiday Inn. As of the most recent servicer report from 20 November 2024, the loan's reported LTV and DSCR were 60.1% and 1.00x, respectively. The other remaining loan in the transaction is the Zamek loan (£24.7 million), which is collateralised by two residential properties in the UK and was performing in accordance with the loan agreement as of the latest servicer report. That loan's most recently reported LTV and DSC were 69.2% and 1.51x, respectively.

As of the November 2024 Note Payment Date, the transaction had a remaining £1.6 million liquidity reserve, which is available to meet shortfalls in servicing and special servicing fees, senior expenses, and interest payments on the Class D1 Notes, which have a remaining balance of £4.9 million. At the current rate of interest (8.7%) applicable to the Class D1 Notes, the liquidity reserve alone could cover interest payments for approximately 3.7 years. In addition, the subordination levels of the remaining rated classes are 90.1% for the Class D1 Notes, 73.7% for the Class E Notes, and 44.4% for the Class F Notes, which have increased from 24.1% (Class D1 Notes), 20.0% (Class E Notes), and 11.9% (Class F Notes), respectively, since closing due to deleveraging from loan repayments and amortisation.

KBRA will continue to monitor the transaction and performance of the subject loan, effectuating rating actions, as or if necessary.

To access ratings and relevant documents, click here.

Related Publications

• Starz Mortgage Securities 2021-1 DAC Surveillance Report
• Starz Mortgage Securities 2021-1 DAC Pre-Sale Report

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

Doc ID: 1007800