KBRA announces the assignment of preliminary ratings to nine classes of HYT 2024-RGCY, a CMBS single-borrower securitization.

The collateral for the transaction is a $620.0 million non-recourse, first lien mortgage loan that is expected to be co-originated by Wells Fargo Bank, National Association, Bank of America, N.A. and German American Capital Corporation. The floating rate loan is expected to have a two-year initial term with three 12-month extension options and require monthly interest-only payments. The mortgage loan will be secured by the borrower’s fee simple interest in the Hyatt Regency Orlando, a 1,641-key, AAA Four Diamond, full-service convention hotel located on 28.2 acres along International Drive in Orlando, Florida. The property is strategically positioned across the street from both phases of the Orange County Convention Center (OCCC) and is connected by elevated walkways to both concourses. The hotel’s facilities and amenities include six food & beverage outlets, over 351,000 sf of meeting and ballroom space, two outdoor pools, a full-service spa, a fitness facility, and a business center. The property was built in 1986 and expanded in 2010. Since 2016, the seller has invested approximately $116.9 million on renovations, which included guestroom renovations in 2017 and 2018, with spending in recent years focused on F&B outlets and building infrastructure. Upon acquisition of the property, the sponsors are planning approximately $60.0 million ($36,563 per key) of elective renovations which will upgrade the guestrooms and pool areas. For the TTM 6/2024 period, the subject property achieved an occupancy of 79.7% with an ADR of $228.59, resulting in a RevPAR of $182.13. The property achieved occupancy, ADR and RevPAR penetration rates of 118.4%, 100.7% and 119.2%, respectively, as of the TTM 6/2024 period.

KBRA’s analysis of the transaction included a detailed evaluation of the property’s cash flows using our North American CMBS Property Evaluation Methodology, and the application of our North American CMBS Single Borrower & Large Loan Rating Methodology. In addition, KBRA also relied on its Global Structured Finance Counterparty Methodology for assessing counterparty risk in this transaction, its Methodology for Rating Interest-Only Certificates in CMBS Transactions, and its ESG Global Rating Methodology, to the extent deemed applicable.

The results of our analysis yielded a KBRA net cash flow (KNCF) for the subject of approximately $69.8 million, which is 10.1% below the issuer’s NCF, and a KBRA value of approximately $715.9 million, which is 31.8% below the appraiser’s as-is value. The resulting in-trust KBRA Loan to Value (KLTV) is 86.6%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental, and appraisal reports, the results of our site inspection of the property, and legal documentation review.

To access rating and relevant documents, click here.

Click here to view the report.

Methodologies

• CMBS: North American CMBS Property Evaluation Methodology
• CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
• CMBS: Methodology for Rating Interest-Only Certificates in CMBS Transactions
• Structured Finance: Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1005495

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