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KBRA Assigns Preliminary Ratings to HPLY Trust 2019-HIT
[May 14, 2019]

KBRA Assigns Preliminary Ratings to HPLY Trust 2019-HIT


Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to nine classes of HPLY Trust 2019-HIT, an $826.5 million CMBS single-borrower securitization.

The collateral for the securitization consists of an $870.0 million non-recourse, first lien, floating-rate mortgage loan that is secured by the borrowers' interests in 92 hotels including fee simple interests in 84 lodging properties (94.5% of portfolio balance) totaling 9,873 keys, and its leasehold interests in eight hotels (5.5%) totaling 926 keys. For the TTM 2/2019 period, the portfolio's occupancy was 74.5% with an average daily rate (ADR) of $124.00, resulting in revenue per available room (RevPAR) of $92.39.

The underlying collateral consists of 32 select-service hotels (3,934 keys, 34.3% of loan balance), 38 limited-service properties (4,444 keys, 33.3%), 21 extended-stay properties (2,175 keys, 29.0%), and one full-service hotel (246 keys, 3.5%) located in 64 different MSAs in 30 states. All portfolio properties are operated under national flags including Hampton Inn (29 properties, 25.4%), Courtyard by Marriott (16 properties, 18.4%), Residence Inn (15 properties, 19.4%), Hyatt Place (15 properties, 15.0%), Homewood Suites (six properties, 9.6%), SpringHill Suites (six hotels, 5.6%), Fairfield Inn (two properties, 1.8%), Embassy Suites (one property, 3.5%), Hilton Garden Inn (one property, 0.9%), and Holiday Inn Express (one property, 0.5%).

KBRA's analysis of the transaction included a detailed evaluation of the properties' cash flows using our U.S. CMBS Property Evaluation Methodology and the application of our U.S. CMBS Single Borrower & Large Loan Rating Methodology. The results of our analysis yielded a KBRA net cash flow (KNCF) for the portfolio of roundly $96.3 million. To value the portfolio, KBRA applied a blended capitalization rate of 11.26% to arrive at a KBRA value of $855.3 million. The resulting KBRA Loan-to-Value (KLTV) is 101.7%. 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, HPLY Trust 2019-HIT, published at www.kbra.com. To access ratings, reports and disclosures, click here.

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 final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: HPLY Trust 2019-HIT





                         
 

Class

   

Initial Class Balance

     

Expected KBRA Rating

  A       $313,025,000           AAA (sf)  
  X-CP       $143,925,0001           AAA (sf)  
  X-NCP       $191,900,0001           AAA (sf)  
  B       $66,215,000           AA (sf)  
  C       $59,470,000           A+ (sf)  
  D       $66,215,000           BBB+ (sf)  
  E       $87,495,000           BBB- (sf)  
  F       $134,710,000           BB- (sf)  
  G       $99,370,000           B- (sf)  
  RR Interest       $26,100,0002           NR  
  RR Certificates       $17,400,0002           NR  

1Notional balances. 2Represents the "eligible vertical interest" in satisfaction of the US Risk Retention Rules.

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 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, and is 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


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