DBRS Finalizes Provisional Ratings on BHMS 2014-ATLS Mortgage Trust

DBRS has today finalized provisional ratings to the following classes Commercial Mortgage Pass-Through Certificates issued by BHMS 2014-ATLS Mortgage Trust. The trends are Stable.

-- Class A-FX at AAA (sf)
-- Class X-CPFX at AAA (sf)
-- Class X-EXTFX at AAA (sf)
-- Class A-FL at AAA (sf)
-- Class X-CPFL at AAA (sf)
-- Class X-EXTFL at AAA (sf)
-- Class B-FX at AA (low) (sf)
-- Class B-FL at AA (low) (sf)
-- Class C-FX at A (low) (sf)
-- Class C-FL at A (low) (sf)
-- Class D-FX at BBB (low) (sf)
-- Class D-FL at BBB (low) (sf)
-- Class E-FX at BB (low) (sf)
-- Class E-FL at BB (low) (sf)
-- Class F-FX at B (low) (sf)
-- Class F-FL at B (low) (sf)

The collateral consists of a $1.0 billion loan, which is divided between a $650.0 million fixed-rate component and a $350.0 million floating-rate component, secured by the Atlantis Resort, a 2,917-room luxury hotel resort located on Paradise Island in the Bahamas. The fixed-rate component has a term of seven years, while the floating-rate component has a term of three years with four one-year extension options. Both components are interest only for the entire terms. The loan, together with the mezzanine loans, refinanced existing debt of $1.87 billion and $81.85 million of transaction costs, leaving approximately $205.45 million of cash equity remaining in the transaction. The transaction is a sequential-pay structure.

The collateral includes the fee interest in amenities, including, but not limited to, 39 restaurants and bars, a 60,000 square foot (sf) casino, a 141-acre Aquaventure waterpark, 73,391 sf of retail space and spa facilities and 458,000 sf of meeting and group space. The resort includes a luxury tower with an additional 495-rooms owned by third parties as condo-hotel units. This rental tower does serve as collateral for the loan; however, the majority of these units participate in the hotel’s unit rental program and these rental agreements are also security for the loan.

The loan sponsor and non-recourse carveout guarantor is BREF ONE, LLC, as to its Series A (BREF). BREF is a wholly owned subsidiary of Brookfield Asset Management Inc. BREF has been involved with the subject property since 2012. The sponsor was the most junior participant in a junior participation whereby the senior participation was securitized in two 2006 floating-rate transactions. The 2006 loan was extended until January 31, 2012, at which time the previous owner was unable to refinance and the sponsor entered into a consensual deed in lieu of foreclosure that assigned and conveyed all of assets to the sponsor on April 27, 2012.

As a result of the high-quality, expansive resort property and the prudent leverage, the certificates backed by the $1 billion of first mortgage debt are provisionally assigned ratings of between AAA and B (low). The DBRS value of nearly $1.2 billion is a 50.9% discount to the appraised value of $2.44 billion. Given the subject’s excellent quality, extensive amenities and ability to cater to all generations and various demographics, in addition to the loan’s prudent leverage, DBRS expects loan performance to be strong during the respective terms and refinance at maturity is likely.

Notes:
All figures are in U.S. dollars unless otherwise noted.

All classes have been privately placed pursuant to Rule 144A. The Class X balances are notional.

The applicable methodology is CMBS Rating Methodology, which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The Rule 17g-7 Report of Representations and Warranties is hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The full report providing additional analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.