NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned the following ratings and Rating Outlooks to HILT 2014-ORL Mortgage Trust commercial mortgage pass-through certificates series 2014-ORL.
Fitch rates the transaction and assigns Rating Outlooks as follows:
--$116,508,000a class A 'AAAsf'; Outlook Stable;
--$2,639,250ab class X-FP 'AAAsf'; Outlook Stable;
--$10,557,000ab class X-CP 'AAAsf'; Outlook Stable;
--$13,196,250ab class X-EXT 'AAAsf'; Outlook Stable;
--$43,885,000a class B, 'AA-sf'; Outlook Stable;
--$32,623,000a class C 'A-sf'; Outlook Stable;
--$43,108,000a class D 'BBB-sf'; Outlook Stable.
a Privately placed pursuant to Rule 144A.
b Notional Balance.
Fitch does not rate the $67,963,000 class E certificates or the $40,913,000 class F certificates.
The certificates represent the beneficial interest in a trust that holds a single two-year floating-rate interest-only mortgage loan, subject to five one-year extension options, in the amount of $345 million secured by the fee interest in Hilton Orlando, a 1,417-room full service hotel located at 6001 Destination Parkway in Orlando, FL. Proceeds of the loan were used to pay off existing debt, fund a capital improvements reserve and return equity to the sponsor. The loan was co-originated by UBS Real Estate Securities Inc. and Wells Fargo Bank, National Association.
KEY RATING DRIVERS
Single-Asset Concentration: The transaction is secured by a single hotel property and therefore more susceptible to single event risk related to the market. Hotel performance is considered to be more volatile due to their operating nature.
Moderate Leverage: Fitch's stressed DSCR for the entire trust is 1.07x, and the stressed LTV is 98.3%. The Fitch stressed DSCR and LTV through class D, the lowest tranche rated by Fitch Ratings in this transaction, are 1.56x and 67.3%, respectively.
Good Asset Quality and Amenities: The Hilton Orlando was constructed in 2009 and has 232,000 sf of meeting and event facilities, a full service salon and spa, a large fitness center and six food and beverage venues. Amenities include a large family pool, a 10,000-sf deck, a quiet pool with whirlpool, lazy river, 12 cabanas, water slide, nine-hole executive putting course, jogging track, two fire pits, as well as volleyball, basketball and tennis courts. The sponsors recently opened The Promenade, a new $2.5 million, 50,000-sf outdoor venue for events, and plan to spend an additional $3.7 million to expand meeting facilities by 10,000 sf and to convert 26 hospitality suites to full sleeper rooms. Fitch assigned a property quality grade of 'B+'.
RATING SENSITIVITIES
For this transaction, Fitch's net cash flow (NCF) was 4.5% below the most recent reported net cash flow (NCF). Unanticipated further declines in property-level NCF could result in higher defaults and loss severity on defaulted loans and could result in potential rating actions on the certificates.
Fitch evaluated the sensitivity of the ratings assigned to the HILT 2014-ORL certificates and found that the transaction displays less than average sensitivity to further declines in NCF. In scenarios in which NCF declined a further 10% or 20% from Fitch's NCF, no downgrade of the 'AAAsf' certificates would be expected to occur. In a more severe scenario, in which NCF declined a further 30% from Fitch's NCF, a downgrade of the 'AAAsf' certificates to 'AAsf' could result.
In addition, Fitch found that the pool could withstand a 81.6% decline in value and an approximately 68.3% decrease in the most recent actual cash flow prior to experiencing $1 of loss to the 'AAAsf' rated class.
The presale report includes a detailed explanation of additional stresses and sensitivities. The presale report is available to all investors on Fitch's web site at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (September 2013);
--'Global Structured Finance Rating Criteria' (May 2014);
--'Rating Criteria for U.S. Commercial Mortgage Servicers' (February 2014);
--'Counterparty Criteria for Structured Finance Transactions and Covered Bonds' (May 2014).
Applicable Criteria and Related Research:
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=718468
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
Rating Criteria for U.S. Commercial Mortgage Servicers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735382
Counterparty Criteria for Structured Finance and Covered Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=842483
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